After amassing $637 million in commercial real estate closings over the last four years, broker Meir Perlmuter has been promoted to First Vice President Investments at Marcus & Millichap’s office in Columbus, OH. Last year, Perlmuter was named one of the top 10 storage brokers at Marcus & Millichap.
While based in Ohio, Perlmuter scours the country for deals with a focus on Florida and the Northeast. The Storage Beat caught up with Perlmuter to congratulate him on his recent promotion and find out what he is hearing in the marketplace.
Check out our Q&A below:
Deal volume seems to be down overall, but what about Florida?
“We are still seeing a lot of deal volume in Florida. In general I would say Florida is still a hot market, but we are seeing less volume than previous years. This is expected due to the interest rate hikes. Pricing in the markets in Florida are still historically aggressive, with 5% to 6% cap rates on current income.”
So why aren’t more sellers making moves?
“Sellers feel like they could have sold six to 12 months ago 50 to 100 basis higher. That put the brakes on transaction volume. The money is still there and a lot of capital is in the space. Everyone is raising funds, everyone has tons of money ready to go.”
“For buyers we need to find a needle in the hay stack, something involving a death, divorce or debt something causing someone to sell. They are not really price motivated, and the easier sale to be made is a price motivated one.”
What does the demand picture look like this summer?
“On a national level, talking to the REITs, they are seeing some occupancies drop slightly. When I talk to the mom and pops, they are not seeing that. Maybe the reason it varies is there isn’t enough of a sample size in the market to test, but I think the sentiment is that occupancy has returned to that typical seasonality. I think in Florida because of the high migration the numbers might be higher. Revenue rates continue to grow and rental rates are still able to go up. Year-over year-growth is still there”
The remotely managed model has grown nationwide, are you seeing any preferences for these type of facilities from buyers?
“We sold a big 25 property portfolio to Public Storage for $200 million that is remotely managed. In some ways, it’s a way for buyers to be more aggressive [on price] and cut down on payroll. Some sites you can do remote and some you can’t. Some may be managed remotely but as a buyer once you get in sometimes you are going to have to put someone in there to turn it around.”
“People are getting more comfortable with it, and understand how it works. Ultimately self-storage is a sales business. If someone comes in you need to sell them on the unit. Operators get nervous about leaving that to a computer and some sites need to be managed. What we seeing gaining more popularity is a sort of hybrid model.”