By Alex Hassel, Storage.com
Would you like to take a look into the future of self storage? The Mele Group has a crystal ball for you. After surveying nearly 100 self storage facility owners and REITS about their thoughts on the industry over the next year, The Mele Group is giving us a closer look at the expected self storage trends for 2016.
The Mele Group first asked owners how their rental rates might change over the next year. 49.3% said they plan on increasing rates more than 3%; 32% said they’ll increase rates between 1-3%; and 18.5% said they’re not planning any changes.
Next, they took a look at what owners and investors expect occupancy to be over the next 12 months. 12.6% of respondents expect capacity above 95%; 62% think it will be between 90–95%; 27.8% believe they’ll see 80-89% occupancy; and just 1.2% say it will be below 80% for them.
With those kinds of numbers, 63.7% of participants said they’re expecting to buy property in 2016, and 28.9% of them are open to selling this year. 88.8% expect a bit of an increase in interest rates during that time while 11.2% think they’ll stay the same.
For those buyers, what’s the best way to get the money? 52% said conventional banks, and 29.3% said CMBS markets. 13.3% answered private capital markets while another 13.3% suggested a life insurance company.
So 2016 seems pretty optimistic, but what are the biggest concerns coming up? 45% are worried about vacancy created by increased new construction; 35% said real estate taxes will be a problem; 21.2% are fretting about interest rates; and 8.7% thought increased operating expenses could be an issue.
The Mele Group works as an adviser and brokerage service for the self storage industry, representing publicly and non-publicly traded REITS, as well as private institutional level funds and firms. The group is partnered with commercial real estate investment services firm, Marcus & Millichap.
Infographic provided by The Mele Group
Alex Hassel is News Reporter for Storage.com. If you’d like to pitch Alex a self storage industry news story, email alex.hassel@storage.com or call 402-779-7328.
