Self-storage had a banner year in 2014 and 2015 will see much of the same. Occupancy averaged above 90 percent in 2014, a record high. Three of the top five REIT’s listed in the Bloomberg REIT Index for the past three years are self-storage REIT’s. The sector’s strength led to fierce competition by investors to acquire self-storage facilities in 2014. Self-storage is now on the radar of many investors from individuals to private equity firms. The self-storage industry is no longer misunderstood or ignored and is now considered a core asset. As a result, cap rates are at all-time lows. Stabilized class-A facilities are trading near 5.5 percent cap rates and quality portfolios as low as 5 percent. With over 4.5 million sq. ft. of new storage being built in 2014 and interest rates expected to begin rising late 2nd quarter or early 3rd quarter of 2015 the sale of existing facilities may slow but the sector will continue to be very strong as most markets are still undersupplied.
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