A shift toward remote work helped push up last year’s same-store occupancy rate for self-storage REIT Public Storage.
During the company’s Feb. 25 earnings call, President and CEO Joe Russell said demand for self-storage “has been very resilient” during the coronavirus pandemic. Russell pointed to people freeing up space for work-from-home setups as one key driver of demand.
Glendale, CA-based Public Storage reported Feb. 24 that same-store occupancy in 2020 stood at 94.5%, up from 93.4% the previous year. In the fourth quarter, the same-store occupancy reached a seasonal record of 95%.
Making room for WFH
“We’re seeing some interesting and new areas of customer behavior surfacing. You could point to the work from home environment,” Russell said, “That’s pronounced and widespread. We’re seeing it across literally all markets. It’s provided an additive driver to the amount of activity that we’re seeing.”
Russell also attributed sustained demand to a level of home sales activity unmatched since 2006, a year before the mortgage crisis.
Russell said the work from home trend emerged as the pandemic unfolded from its regular surveys of new customers. Russell expects a large share of the new space-starved home office customers to stick around “through a good chunk of 2021” or longer.
“I think many components of work from home are here for a much longer period of time than we might have predicted,” Russell said.
Meanwhile, the move-in rate rose 12% in the fourth quarter of 2020, compared with a drop of 14% in the second quarter when the country entered a state of emergency.
Wrapping up 2020
Another byproduct of the pandemic: No-contact technology now accounts for nearly half of Public Storage move-ins. About 300,000 tenants took advantage of e-rental capabilities in 2020, according to Russell.
For the year, Public Storage saw a 1% decline in same-store revenue, a 2.3% dip in same-store NOI and a 2.7% rise in same-store operating costs.
Also in 2020, the REIT’s acquisition team arranged $800 million worth of deals. This year, about $580 million in acquisitions are in the pipeline.
“At Public Storage, our focus on the health and safety of employees and customers, enhancing the industry’s leading platform and brand, and utilizing unparalleled capital access to fund growth drove our success in 2020,” Russell said in a news release.
“The outlook is favorable as we enter 2021. Public Storage is transforming the customer experience through innovation amidst strong consumer demand while executing on a robust external growth environment through property acquisitions, development and redevelopment.”