New Supply Impacting Growth, Guidance Reduced
- The self storage industry enters 2018 with continued strong consumer demand for storage offset by new supply. The full-year and fourth quarter 2017 results from the self storage REITs reflected positive occupancy and revenue gains in the sector. New supply continues to impact revenue growth in select markets. While revenue growth projects to more historical norms, the self storage sector continues to outperform most other REIT sectors.
- There is a consensus amongst the self storage REITs that demand remains resilient and healthy. Despite a nearly seven-fold increase in new supply deliveries over the past four years, it is a testament to the resiliency of the industry that self storage revenue growth remains positive.
- The self storage REITs generated same-store revenue growth for the full-year 2017 ranging from 1.7% to 5.7%. Fourth quarter 2017 revenues grew from 1.3% to 5.0%.
- Net operating income of same-store pools for the full-year 2017 generated by the REITs range from 0.3% to 7.5%. Fourth quarter 2017 net operating income grew from 0.4% to 5.8%.
- Self storage REITs tempered guidance for same-store revenue growth in 2018, with projections for the full year varying from 1% to 5%, depending on impact of new supply in certain markets. Industry historical average revenue growth has been about 4%.
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