Scott Schoettlin’s job title may have changed, but his mission remains the same: grow SkyView Advisors’ self-storage brokerage business.
Schoettlin, the former senior vice president of the Tampa-based commercial real estate brokerage firm, became managing director of SkyView late last month and will now oversee the firm’s 30 employees on a day-to-day basis.
The goal is to keep SkyView’s staff focused on what it currently does best: representing owners of self-storage facilities in sale transactions. Meanwhile, the top brass at the company are planning to expand SkyView’s services into other commercial real estate asset classes.
So it’s a busy time at SkyView, founded in 2015 and known for its proprietary analytics software that it uses in property transactions.
“We’ve been moving at a great trajectory of late,” says Schoettlin. “We definitely have a goal of growing the business.”
Schoettlin recently spoke with correspondent Jay Fitzgerald about the self-storage market, property valuations, investor demand and other subjects.
Valuations have been pretty high lately. Do you think they will come back down anytime soon?
In a word: no. Nationally, prices are being driven by strong operating fundamentals, strong demand and increasing street rates across the board – and that’s for both climate-controlled and non-climate-controlled (facilities). So at least in the near future we continue to see prices staying very strong.
Who’s in the market for facilities right now? What type of investors? Any groups you see stepping back?
That’s a good question. We see a variety of buyers creating a great demand right now. We have everyone from private investors, private equity and hedge funds, as well as REITs. And I don’t really see demand stepping back. But if there were any groups that we see maybe lowering some of their 2022 expectations, the REITs by their own projections are looking at acquiring maybe a little less that what they did in a record year in 2021. But it’s still too early to tell. Their projections last year were much lower than where their actuals ended up being. But if that group is stepping back, we’re seeing that void filled by private equity and all the other investors.
What metro markets do you think are undervalued? And what metro markets do you think are a little overvalued at this point?
What I would say is there are definitely some metros where you see some of the greatest values. But I think if you look at secondary and tertiary markets, you’re going to see better values there. Throughout the Sunbelt states and the southwest, as well as the Carolinas, I think they present some of the best values right now on the market. I don’t really see any metro markets right now overvalued because of the strong fundamentals and street rates and high demand.
Demand for storage space has also been high since the pandemic. Do you see that waning anytime soon? Why is it still so high?
I don’t necessarily think the pandemic is connected to the high demand. In some markets that could be the case, where we’ve seen transitions in housings or we’ve seen people migrate out of certain metro areas and moving to the Sunbelt states. But I think there’s also increased demand by people just moving into different metro areas where there’s a lot of multifamily housing development. I think also that there’s just not been enough supply to keep up with the growing population in a lot of those areas.
How do you think the typical spring leasing season will play out this year?
Good question. Toward the end of 2021 we saw market rates continue to increase and we haven’t seen occupancy really effected by that. In December, there was a slight downtick in occupancy, which we largely think was a bit seasonal. But we’ve seen most groups, especially the large REITs, hold the line on their existing street rates. We suspect that they’re doing that expecting to still see a really strong demand and a really good spring lease-up. So we expect to see increased occupancy, despite the fact we’re seeing higher street rates for rents.
What’s your advice to first-time self-storage facility buyers right now?
Number one, I would probably look for properties that are not going to be in the targets for the large institutional buyers. This would be properties at 40,000 net rentable square feet and below. I would look at secondary and tertiary markets that some of the bigger institutional buyers might overlook. If they do want to get into larger properties and into some of the bigger markets, I would recommend a first-time buyer try to pair-up and be a co-investor with a larger and more experienced group.
