It is uncertain what 2017 holds for the self storage industry. From a new presidency, to spiking interest rates, to negative REIT performance and to changes in lending requirements, we at The Mele Group feel that 2017 could be a tumultuous year for self storage.
Predicting President Trump’s first year in office leaves many unanswered questions. Given the fact that he is the “outsider”, predicting what policies he will implement is extremely unpredictable. It is highly likely that across the board tax cuts and infrastructure spending will be high priorities, but accomplishing these goals in a deficit neutral manner could prove difficult.
With the 10-year treasury spiking and Basel III widening spreads even further, it is exceedingly probable that those buyers wishing to utilize CMBS financing will decrease their offering prices of facilities to compensate for the additional cost and equity needed to acquire said properties.
Buyers’ proforma expectations have already pulled back over the last 45 days and this has applied upward pressure to cap rate expectations. Sellers’ pricing expectations are still relatively elevated and the widening bid-ask spreads and new supply worries have not yet brought sellers’ hopes in line with the current market. View the 2016 Storage Wrap Up