Dean Jernigan, Chairman and CEO of Jernigan Capital, believes that the country is in approximately the “fifth inning” of the current self storage development cycle with some other markets, as in Texas and South Florida, somewhere closer to the “seventh inning.” We believe the cycle is in the home stretch and that developers, owners and operators all need to plan accordingly.
At Jernigan Capital, we are data driven, utilizing multiple different resources when evaluating a new self storage development project. Companies like STR, Yardi, Reis and Argus are all working to build databases of current supply plus pipeline reports of new self storage development projects. If the sector wants to prepare for a “soft landing” at the end of this development cycle, we must all use these resources.
Historically, we’ve known if a development cycle was ending when rental rates softened and occupancies declined. Essentially, the sector waited until markets were becoming overbuilt before it did anything to "right the ship" in those markets. We urge utmost caution against making these same mistakes as this cycle draws to an end. We have data that we have not had in the past, and it is comprehensive information. If developers and lenders consider this data, we can develop projects on the best sites, prevent overbuilding and hopefully achieve that “soft landing” that will be good for all self storage professionals.
I encourage you to reach out to Yardi, Reis, STR and Argus. Utilize the resources they have compiled. Work with them to provide insight you might have that they do not. Use your contacts around the sector as you look to develop or finance storage. Be aware of all development going on in your market. Talk to other developers, contact permit offices and drive your city to look for new development. If you do this research, the end of the cycle will be much more manageable.
Jernigan Capital is still optimistic about the end of the development cycle, but we must approach it intelligently, carefully and thoughtfully.
About the Author
Manager of Business Development
Warner Russell is the Manager of Business Development for Jernigan Capital. He is responsible for assessing project demographics before working with developers to underwrite individual deals. Before coming on board at JCAP, Warner worked as a writer and account executive for a nationally recognized advertising agency. He has also spent time working in retail banking and personal wealth management. A graduate of the University of Mississippi, Warner is married and the proud father of a golden retriever.