After a phenomenal run over the last few years, it appears the self-storage industry may be running out of steam for now.

Public Storage, the industry’s largest player and a bellwether for the sector at large, saw revenue growth decelerate more than 40 percent during the first half of the year, compared to 2016.

During the second quarter, same-store revenue grew 3.3 percent over the previous period. In 2016, Public Storage grew revenue 6 percent during the quarter. Same-store net operating income growth fell from 6.6 percent during the second quarter of 2016 to 2.6 percent in the second quarter of this year.

“Certainly new supply is having an impact but I think a bigger impact on the numbers is the comps that everyone is coming off from 2015 and 2016,” said CEO Ron Havner during its quarterly call with industry analysts.

Then and now

Havner noted that this time last year the industry was still experiencing peak occupancy and operators’ promotional discounts and advertising expenses were nominal. Move forward today and rental rates for new customers have fallen.

“Rental growth today is for the most part what your rental rate increases are for your existing customers,” Havner said.

Havner said Public Storage will be offering more promotional discounts and spending more on advertising to attract more customers. The company plans to lower rental rates in its weakest markets, Houston and Atlanta among them, as much as 15 to 20 percent going forward in an effort to increase move-in volume

The storage business is poised to get even tougher in the months to come, as Havner estimates that deliveries of new self-storage space won’t peak until 2018—with up to 800 new facilities opening their doors nationwide. That would be about a 20 percent increase over new facilities opening in 2017.

“Then you are going to have a year or two of absorption from that,” Havner said.

 

 

 

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Alexander Harris
  • carwash1

    Hello
    Well of course we expect some slow down with all the new building of self storage facilities that has been going on all over in the united states .
    However Mr. Havner is talking about self storage in the USA only I would like to hear what Shurgard a division of Public Storage in Europe is doing? Shurgard self storage is the largest self storage provider in the European union and all of my reports and investigations see no slowdown in self storage on the Eu side of the pond.
    Safebox-selfstorage.GmbH with 5 sites very small player in comparison but we have seen a large increase in the use of our services in Germany and project this to continue in the foreseeable future as the market is still in its infancy .