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Using Pricing Intelligence to Support Your Investment Decisions

Written by: Cindy Rivera Posted: 7/26/2017
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You may have heard: Self storage development is still booming. While overdevelopment and market saturation are common concerns, it has not deterred the industry from pursuing new developments. Markets where significant population growth has taken place are some of the most sought after. According to the latest Census study, Texas is home to four of the top five fastest growing cities in the country: Conroe, Frisco, McKinney and Georgetown saw a population increase of 5.5% to 7.8% between 2015 and 2016. Investors and developers considering these markets can use pricing intelligence to evaluate current market conditions, trends and opportunities. The following examines pricing conditions in these four Lone Star cities:

Overall, average rates have fallen in all four cities since the beginning of 2016. The city of Conroe saw rates on their units decline by 4.7%. Rates in Frisco decreased by 3.2%, meanwhile they fell by 6.3% and 2.9% in McKinney and Georgetown, respectively. Rates in Conroe for a 10 x 10 climate controlled unit were stagnant from 2015 to 2016 at an average of $130, then fell to $118 in 2017. In Frisco, the average rate for a 10 x 10 climate controlled unit decreased from $133 in 2015 to $122 in 2016 and $118 in 2017. While in McKinney the average rate went from $127 in 2015, down to $118 and $112 from 2016 to 2017, respectively. Georgetown saw the largest decrease in rate for this unit size, from $132 in 2015 to $98 and $93 from 2016 to 2017, respectively.

Pricing volatility, which measures the number of times a specific price is changed over a period of time, is an indicator of aggressive or stagnant markets. In these four cities, overall pricing volatility has dropped by about 50% since 2015, meaning pricing in these markets have become more stagnant in the last two years.

Pricing intelligence helps support investment decisions by drawing a meaningful picture of the market. Anyone looking to invest in self storage should consider incorporating this practice into the due-diligence and market analysis process. Without clear insights, investors and developers risk making costly decisions.

Sources: https://www.census.gov/content/dam/Census/newsroom/releases/2017/cb17-81-table1-fastest-growing-large-cities.pdf

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