With the sudden advent of the Covid-19 pandemic upon us in March of 2020, many of us wondered if the pandemic would affect the commercial real estate markets the same way as the Great Recession of 2009-2012. Calendar year 2021 started out very cautiously in our self storage sector as rental move-ins were fairly stagnant and there was no spring college student influx as most of the universities were still operating on “remote” learning rather than in the classroom.
However, with the help of our various state and national self storage associations’ lobbying efforts, self storage was named as an “essential business” and owners/operators were able to keep their facilities open and conduct business to a public that was learning how to work, learn and socialize remotely from home. In particular, this “displacement” of employees from an office to home, along with a robust housing industry, fueled by record low interest rates and the Millennial generation coming of age; and people relocating from center city to suburban, rural and even resort areas, all contributed to a sharp increase in demand for self storage and introduced a new segment of the population that had never used self storage before.
All of these factors then increased self storage occupancies; helped new facilities rent up faster; and increased revenues while interest rates and capitalization (cap) rates remained at historic lows. Low cap rates result in higher values and many long-term owners of self storage began taking advantage of the market and placed their facilities, and even entire portfolios, for sale to the tune of $19 billion in transactions for 2021.
Our SVN national self storage team grew in 2020 and 2021 and we now have representation in 12 markets across the country with skilled, experienced advisors who bring buyers and sellers the unique combination of SVN’s robust national platform and the local market expertise to provide the latest, most critical information in a rapidly evolving market. Our advisors guide them through the research and analysis leading to the acquisition, development and disposition of land for development or their existing self storage assets. This local market knowledge, backed by the power of our national experience and resources, is key to optimize the transaction process and deliver an equitable deal for all parties.
Our office assisted in transactions valued both at $93 million on high and $850,000 on low this past year. Three of our team members achieved President’s Circle status within SVN corporate, the second highest dollar value recognition; and we had Kateleigh Conway, a new advisor from Mobile, AL, join us with a summa cum laude degree in finance; Jacob Cserepes from Salt Lake City, a recently discharged veteran, both with a passion to join our Specialty Practice Group and an eagerness to collaborate and learn the brokerage business.
One of our team members earned their CCIM degree after three years of continuing education at the highest level in our industry, while two more team members started the continuing CCIM educational process. Four of our members are investor/partners in a self storage facility(ies) and bring that in-the-trenches operational expertise to our workday, making us better advisors to our clients.
I’ve sat down with several of our newer team members and made sure that their business plan for 2022 includes the specific technology that is available to us to be more productive with our time. We have also ramped up our marketing efforts to ensure all of our team members benefit from the industry recognition of the SVN brand and reputation of our team’s senior leaders. This includes an updated website, regular newsletters, press releases on closed deals, event sponsorship and participation, advertisements, expanded LinkedIn presence, contributed editorials, co-author of a book, and more. By putting this infrastructure in place, we are positioning ourselves to capture mindshare and market share as the market conditions in our industry continue to indicate strong growth over the next few years.
As institutional money continues to seek out self-storage investments, family offices and individual investors/operators will need more sophisticated advisors like us to help them successfully navigate this next frontier for self-storage investment. It’s an exciting time to be in the self storage industry and I’m looking forward to another record-breaking year.
-Nick Malagisi, SIOR, Managing Director and National Director of Self Storage at SVN