The self storage sector began seeing weaker performance in 2023 due to a decline in demand, primarily caused by low home sales (due to high interest rates) and subsequent reduced mobility nationwide. There has been a 25 percent reduction in state-to-state migration compared to 2021 and 2022.

Consequentially, self storage revenue growth was nearly flat last year, driven by declining occupancy and decelerating street rent growth.  Find the most recent monthly self storage market outlook from Yardi Matrix. A near term expansion in self storage supply is forecast, while the coming years are expected to show an overall inventory decrease.

Jeff Adler, vice president of Yardi Matrix, mentioned new rental strategies employed by REITS that keep street rents low and quickly moving vacant spaces, impacting same-store rent growth negatively. Despite construction and completions remaining steady, same-store rent growth was -3 percent in January.

Adler discussed the current state of the market, highlighting that occupancy and rent increases during the pandemic pushed same-store sales revenues up by 37 percent. However, same-store occupancies have now declined to pre-COVID levels, hovering around 90 percent, and the decline in street rents is affecting overall revenues.

Matrix analysts believe that the sector may not see a significant performance improvement until home sales recover, expected in late 2024 or early 2025.

“I think an improvement really doesn’t happen until home sales happen, which means the for-sale market opens up and that means (lower) interest rates, and that’s later in 2024, maybe early 25,” Adler said.

However, potential opportunities in self storage are not unheard of. Locations where supply pressures were putting downward pressure on street rents, such as Orlando, Tampa, and Atlanta. Markets that experienced declining supply over the past few years, like New York, Denver, and Minneapolis, are considered to be on the mend.

“These are places that really were hit hard a few years ago. But supply is waning. So they’re the first to kind of bounce, and I would say there are opportunities for stressed or distressed properties, you know, acquired in 2021 and 22 or developed in 2023,” Adler said.

Gain more insight on the state of the economy as a whole and projections for the housing market by listening to the webinar recording.

The post Self Storage May Struggle As Fewer Americans Move appeared first on Yardi Matrix Blog.

The Yardi Matrix team, including Jeff Adler and Tyson Huebner, delivered its final webinar of the 2023 year on the student housing sector’s performance and investment opportunities. If you missed it, you can view the recording and presentation slides here.

Student housing maintained strong performance into the start of the 2023/2024 school year, though preleasing activity and rent growth showed some signs of slowing in the final weeks of leasing season.

“The bottom line is that this sector compared to other sectors in the housing industry is looking very stellar. Good positioning, good rent growth – we don’t think (next year) will be quite as good as this year was, but still very strong,” said Adler, vice president of Yardi Matrix. “This is a great real estate segment and industry to be in, but picking the right schools is very critical to success.”

Yardi Matrix has updated the schools whose housing is tracked in the Yardi 200, swapping out about 30 institutions less relevant to investors. The total tracked data set now includes 2,200 properties with 1.1 million beds.

As of September 2023, 95.1 percent of beds at Yardi 200 universities were preleased, compared to 96.2 percent in September 2022. Lower preleasing in recent months can be partly attributed to slow lease-up of new 2023 deliveries, which were only 84.4 percent preleased in September.

Rents are near an all-time high at $846 per bed, relatively unchanged in the past four months. Rent growth dropped to 6.1 percent in September, down from 6.5 percent in August and a peak of 7 percent in March 2023. But it is still well above previous years; it averaged 2.9 percent in September 2019, 2020, 2021 and 2022. (Read more findings from the latest student housing report here.)

Student housing has seen a steep drop-off in transaction activity, which is attributed to ongoing strong performance and difficult financing conditions. But for owners and developers who completed new projects in time for fall leasing, rents were much higher than for existing properties.

“New properties delivering this year had rents that were 29 percent above the national average,” said Huebner. Rents per bed for newly completed units averaged $1,088 as of September.

“With continued rent growth in the sector and new supply coming at pretty high price points, I do think that will be an emerging investment opportunity when capital market conditions are ripe,” Adler said.

He continued: “Everything’s a great place to put capital into; it’s a great place to participate. It does require an intense knowledge of each particular school and the sort of demand supply enrollment balances that make that all work.”

Improve your market knowledge with a Yardi Matrix subscription: the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, vacant land, industrial, office, retail and self storage property types. Email matrix@yardi.com, call 480-663-1149 or visit yardimatrix.com to learn more.

The post Student Housing Webinar – Fall 2023 appeared first on Yardi Matrix Blog.

Self storage performance slumped in the second quarter of 2023, typically the strongest quarter, due to weak demand. That was among the top takeaways from an Aug. 24 webinar hosted by industry leading data provider Yardi Matrix.

You can view the webinar recording and presentation materials here.

Among other key takeaways for the sector:

• Street rate growth continues to decelerate, as same store rates were down -4.6 percent in July
• One bright spot: operators were able to grow revenue by increasing existing customer rents (ECRI)
• The amount of new supply under construction Is moderating and likely won’t return to normal until 2025-2027
• Investment activity is drastically reduced, with two notable exceptions (read on for details)

“We’re in a kind of a 2017-2019 kind of world, where revenue growth is really off the back of ECRIs versus street rents,” said Jeff Adler, vice president of Yardi Matrix, during the webinar.  Reasons that demand has dropped included the challenging single family real estate market, with interest rates for new purchases around 7 percent, and diminished mobility of American households post-pandemic.

“Lower street rates are a result of weak move-in activity, with average REIT occupancy in Q2 2023 down 400 basis points from its all-time peak in Q2 2021,” states the latest self storage report..

In July, overall national street rates (all unit sizes and types combined) dropped $1 to $141, down 0.7 percent month-over-month. Historically, rate growth is positive in July, averaging a sequential increase of 0.8 percent in the past seven years.

While an anticipated recession has yet to fully materialize, Adler still expects that one will be in place by the end of the year, due to a lag time between Federal Reserve actions and the ultimate impact on the real economy.

“We’re still in this period of time where you’re seeing strong economic growth, but we are seeing the beginning of the signs of a slowing trend,” Adler said.

Self storage demand has historically been resilient, coming from a variety of sources, and growth rebounds quickly following a downturn due to month-to-month lease terms and flexible customer rate increase programs.

But investor increased in the sector has also taken a hit in 2023, with two notable exceptions. Extra Space merged with competitor Life Storage in July. The combined company is now the largest storage operator in the country (based on the number of self-storage locations) with over 3,500 locations, approximately 270 million square feet of rentable storage space, and more than two million customers.

Public Storage also announced last month that it has entered an agreement to acquire Simply Self Storage for $2.2 billion. According to the announcement: “The portfolio comprises 127 wholly-owned properties and 9 million net rentable square feet that are geographically diversified across 18 states and located in markets with population growth that has been approximately double the national average since 2018.”

Aside from those significant moves, sales and M&A activity have plummeted, said Tyson Huebner, director of institutional research for Yardi Matrix.

“It should be no surprise that transaction volume thus far this year has really fallen off the cliff. The number of properties sold in the first half of 2023, which doesn’t include those two portfolios, was down 56.6% from the first half of 2022,” Huebner said.

Gain additional insights on self storage and the economy by checking out the entire webinar.

The post Weak Demand Hurts Self Storage appeared first on Yardi Matrix Blog.

The question now is, how long is this exceptional performance expected to continue? With the fall 2022 term just underway, this program will review how university markets ended the preleasing season with occupancy and rent growth, with an outlook for what’s to come in the short- and long-term. Join panel of experts as they offer key insights affecting the student housing industry.

Topics will include:

• A look at early enrollment indications for the fall 2022 term and other current trends impacting the off-campus dedicated student housing industry
• A review of key fundamentals at the Yardi 200 and university level, including preleasing, rent growth, supply growth and transactions
• Expert predictions about the longevity of the solid performance of the industry and a discussion of potential headwinds coming
• A long-term outlook for the industry, including Yardi Matrix rent, occupancy, supply and enrollment forecasts

REGISTER TODAY

The session was led by:

Jeff Adler
Vice President, Yardi Matrix
jeff.adler@yardi.com

Ron Brock
Industry Principal, Yardi Matrix
jr.brock@yardi.com

The post Student Housing National Outlook Webinar – Fall 2022 appeared first on Yardi Matrix Blog.

On a market level, rate growth is tempering across major and tertiary markets. Street rate performance in markets appears to be largely driven by population growth rather than the level of storage penetration in a market. Especially as rates remain the strongest in high-growth markets in the South, Southeast and Southwest, despite high levels of available storage supply.

This solid rate growth and healthy demand has supported robust new construction starts for the self storage industry. As a result, the new-supply pipeline has been steadily increasing since the start of the second quarter of 2022, renewing some fears of oversupply in select markets. However, rising costs and extended construction timelines will likely moderate the pace of new supply over the coming years.

RV and boat storage facilities may only be a small niche equal to roughly 3-5% of the total U.S. self storage industry, but with business booming recently, this niche is starting to draw a lot of attention. Demand for this distinctive storage type is surging due to the increasing use of RVs and boats, as well as the growing efforts of local organizations to prohibit their storage in residential areas. As the sector grows, it continues to attract investor interest, seeing record-high transaction activity in 2021. However, due to due to unique considerations and constraints in developing RV and boat storage facilities, the amount of new supply being delivered hasn’t met recent demand. Overall, the RV and boat storage niche appears to be in the beginning stages of growth, so it will be interesting to see how it evolves in coming years.

Get the full Yardi Matrix webinar recording and presentation materials.

The post [Webinar Recap] Self Storage National Outlook – Fall 2022 appeared first on Yardi Matrix Blog.

Join our Yardi Matrix experts as they offer key insights into the self storage market.

Topics will include:

• National market overview of self storage fundamentals
• Analysis of street rate performance for different markets and unit sizes
• Overview of RV and boat storage performance
• An in-depth look at development activity, including a forecast of new supply for the next several years

Get the full Yardi Matrix webinar recording and presentation materials.

The session was led by:

Jeff Adler
Vice President, Yardi Matrix
jeff.adler@yardi.com

Paul Fiorilla
Director of Research
paul.fiorilla@yardi.com

The post Self Storage National Outlook Webinar – Fall 2022 appeared first on Yardi Matrix Blog.

Join industry experts Jeff Adler and Paul Fiorilla as they offer strategic insights on the current state of the multifamily market. Topics will include:

• The current state of the economy with a focus on inflation
• A multifamily fundamentals overview, including rents, occupancy, supply and transactions
• An analysis of the movement of people and how migration patterns impact the multifamily industry
• An outlook for the industry, including Yardi Matrix rent, occupancy and supply forecasts
• A brief discussion of the single-family rental market

WATCH RECORDING AND DOWNLOAD PRESENTATION

The session was led by:

Jeff Adler
Vice President, Yardi Matrix
jeff.adler@yardi.com

Paul Fiorilla
Director of Research
paul.fiorilla@yardi.com

The post Multifamily National Outlook Webinar – Spring 2022 appeared first on Yardi Matrix Blog.

Join our Yardi Matrix experts as they offer key insights into the self storage market. Topics will include:

• National market overview of self storage fundamentals
• Comparison between major market and small market fundamentals
• Deep dive into small market selection and performance
• Analysis of street rate performance for different unit sizes and types
• Discussion of relationship between self storage and multifamily performance
• An in-depth look at development activity, including a forecast of new supply for the next several years

Thanks for making our Self Storage National Outlook – Spring 2022 a success! The webinar recording and the accompanying slides are available HERE.

A webinar recording is also available at the link below.

The session was led by:

Jeff Adler
Vice President, Yardi Matrix
jeff.adler@yardi.com

Paul Fiorilla
Director of Research
paul.fiorilla@yardi.com

The post Self Storage National Outlook Webinar – Spring 2022 appeared first on Yardi Matrix Blog.

• The current state of the economy with a focus on inflation
• Newly released investment risk analysis, combining political, infrastructure and environmental risk factors
• An outlook for the industry, including Yardi Matrix rent, occupancy and supply forecasts
• A brief discussion of the single-family (built-to-rent) market

Thanks for making our Multifamily National Outlook Webinar – Fall 2021 a success! The webinar recording and the accompanying slides are available HERE.

A webinar recording is also available at the link below.

Speakers

Jeff Adler Vice President

Jeff Adler is Vice President, Yardi Matrix, which offers the industry’s most comprehensive market intelligence service for multifamily, office, industrial, self storage and student housing property types. He also serves as Yardi’s industry principal for the self storage, manufactured housing and associations markets. Prior to joining Yardi, Mr. Adler held positions at AIMCO, Progressive Insurance, Oppenheimer & Co. and Strategic Planning Associates Inc., among others. He holds a bachelor’s degree from Yale University and an MBA from the Wharton School of the University of Pennsylvania. Mr. Adler is a Board Member of the National Multifamily Housing Council (NMHC), Chairman of the Urban Land Institute’s (ULI) Multifamily Silver Council and lecturer at Harvard University’s Graduate School of Design Real Estate Executive Education program.

Jack Kern Director of Research and Publications

Jack Kern is the director of research and publications for Yardi Systems, Inc., and is responsible for the data analytics team at Yardi Matrix and the information publishing group in New York City comprised of Commercial Property Executive and Multi-housing News. The Yardi Matrix product suite is being greatly expanded to provide clients with extensive analytical capabilities and will encompass broader coverage nationally soon. Within the news and information publishing group, additional reporting and market data is becoming available that encompasses all property sectors and specialty areas, including energy. Prior to joining the firm Kern served as the managing director of consultancy Kern Investment Research, a national research practice with clients across the U.S. and Europe. Earlier in his career Kern worked at both Archstone-Smith where he managed their global research operation and the Charles E. Smith companies a firm subsequently acquired by Archstone.

The post Multifamily National Outlook – Fall 2021 appeared first on Yardi Matrix Blog.

Join our panel of market experts as they offer key insights affecting the student housing industry. Topics will include:
• A review of key fundamentals at the Yardi 200 and university level, including preleasing, rent growth, supply growth and transactions
• News impacting the industry as universities open for students this fall
• A look at how the upcoming fall term is shaking out and how close the industry is to normalcy
• A long-term look at the student housing industry, including our newly released enrollment and supply forecasts

Thanks for making our Student Housing Outlook Webinar – Fall 2021 a success! The webinar recording and the accompanying slides are available HERE.

A webinar recording is also available at the link below.

Speakers

Jeff Adler
Vice President

Jeff Adler is Vice President, Yardi Matrix, which offers the industry’s most comprehensive market intelligence service for multifamily, office, industrial, self storage and student housing property types. He also serves as Yardi’s industry principal for the self storage, manufactured housing and associations markets. Prior to joining Yardi, Mr. Adler held positions at AIMCO, Progressive Insurance, Oppenheimer & Co. and Strategic Planning Associates Inc., among others. He holds a bachelor’s degree from Yale University and an MBA from the Wharton School of the University of Pennsylvania. Mr. Adler is a Board Member of the National Multifamily Housing Council (NMHC), Chairman of the Urban Land Institute’s (ULI) Multifamily Silver Council and lecturer at Harvard University’s Graduate School of Design Real Estate Executive Education program.

Jack Kern
Director of Research and Publications

Jack Kern is the director of research and publications for Yardi Systems, Inc., and is responsible for the data analytics team at Yardi Matrix and the information publishing group in New York City comprised of Commercial Property Executive and Multi-housing News. The Yardi Matrix product suite is being greatly expanded to provide clients with extensive analytical capabilities and will encompass broader coverage nationally soon. Within the news and information publishing group, additional reporting and market data is becoming available that encompasses all property sectors and specialty areas, including energy. Prior to joining the firm Kern served as the managing director of consultancy Kern Investment Research, a national research practice with clients across the U.S. and Europe. Earlier in his career Kern worked at both Archstone-Smith where he managed their global research operation and the Charles E. Smith companies a firm subsequently acquired by Archstone.

Chris Nebenzahl
Editorial Director

Chris Nebenzahl is the Institutional Research Manager at Yardi Matrix, and is responsible for overseeing market research and data analytics, as well as editorial composition for Yardi Matrix, Commercial Property Executive and Multi-housing News. Mr. Nebenzahl facilitates the expansion of the Yardi Matrix reporting suite and provides in-depth analytical tools for clients across the commercial real estate industry. His focus includes data analytics and reporting for the multifamily, office, self-storage and industrial asset classes. Before joining Yardi, Mr. Nebenzahl served as a portfolio manager for the Bank of New York Mellon, managing fixed income portfolios for municipal and public sector clients across the United States. He holds a Bachelor’s degree in economics and a Master’s degree in finance, both from the University of Denver.

The post Student Housing National Outlook – Fall 2021 appeared first on Yardi Matrix Blog.