The coronavirus pandemic may have crushed businesses like restaurants and hotels in 2020, but self-storage REIT Extra Space Storage emerged from the tumultuous year relatively unscathed.
Salt Lake City, UT-based Extra Space reported Feb. 22 that same-store rental revenue declined just 0.1% in 2020 compared with the previous year, while same-store NOI dipped 0.7% and same-store operating expenses increased 1.3%.
Perhaps the most eye-opening statistic for Extra Space: At the end of 2020, same-store occupancy stood at 94.8%. That represents an all-time high for year-end occupancy, suggesting that moving and other activities that drive self-storage decisions tapered off after the onset of the pandemic.
Despite “significant turbulence,” executives at Extra Space experienced “a very successful 2020 and look forward to an even better 2021,” CEO Joe Margolis said.
Riding the occupancy wave
In a Feb. 23 call with Wall Street analysts, Margolis acknowledged the REIT’s sky-high occupancy rate does have a shelf life.
“At some point, COVID is going to be in the rearview mirror and we believe customer behavior will return to normal,” Margolis said. “Now, I don’t think that means there is going to be an end-of-COVID day and someone is going to flip the switch and everyone runs to move out of their [storage units].”
A bigger 2021 ahead?
Despite the lingering effects of the pandemic, executives at Extra Space envision a robust 2021. They’re forecasting same-store revenue growth of 4.25% to 5.5% versus 2020, same-store expense growth of 3.5% to 4.5% and same-store NOI growth of 4.25% to 6.25%.
“While we are excited about the accomplishments of 2020, we are even more optimistic about how our efforts have positioned us for 2021,” Margolis said. “Rentals continue to be steady and vacates continue to be muted. We are heading into 2021 with the highest occupancy we have ever experienced at this time of year and expect rental rates to remain strong.”