Joe Russell, president and CEO of Public Storage, thinks the U.S. self-storage sector remains in a “holding pattern” when it comes to development of new facilities.

In a Feb. 23 call with Wall Street analysts, Russell explained that the holding pattern started in 2021 and should end in 2023. Amid this holding pattern, the U.S. should see 500 to 600 new self-storage facilities come online each year, he said.

Russell cited slowed-down government approval processes, higher labor and land costs, and nagging supply chain problems as reasons for the holding pattern. Development hurdles are “much tougher” now than in the recent past, according to Russell.

“The development business in our sector is highly fragmented, and you’re going to see it continue to play through by, more often than not, small developers that may be going through a process on one site at a time or, in some cases, for the first time,” Russell said during the self-storage REIT’s fourth-quarter earnings call.

Highlights of 2021 results for Glendale, CA-based Public Storage include:

  • A 10.5% rise in same-store revenue. Public Storage predicts same-store revenue will grow 12% to 15% this year.
  • A 2% decline in same-store operating expenses. The REIT foresees 6% to 8% expense growth in 2022.
  • A 15.4% jump in same-store NOI. The company envisions same-store NOI growth this year of 13.4% to 18%.
  • The acquisition of 232 facilities for $5.1 billion. This included two $1.5 billion-plus portfolios. Public Storage expects to spend $1 billion on acquisitions this year.

“Last year, the Public Storage team unlocked opportunities in one of the most historically vibrant eras for the self-storage industry,” Russell said.

John Egan