More change is in the air for the self-storage industry.
In mid-January, Newmark Knight Frank added Chris Sonne and Jonathan Lang to its Valuation & Advisory Self-storage practice. Both moved to NKF’s Irvine, California, office from CBRE’s Newport Beach office.
NKF created a self-storage valuation specialty about six months ago and has added several industry heavyweights at a time when investors remain bullish about the self-storage industry’s long-term prospects.
Sonne is co-leading the still-new valuation practice with Steve Johnson, who formed the NKF’s V&A self-storage practice from a nucleus of people who were covering self-storage at Integra Realty Resources. In June 2018, NKF announced plans to acquire the Pasadena and Denver offices of Integra. NKF had previously acquired eight other IRR offices.
Sonne said his old boss at Cushman & Wakefield, John Busi, was a big motivator in his decision to make the move to NKF. Busi, based in New York, joined NKF in 2016 as president of NKF Valuation & Advisory where he’s led NKF’s growth in its valuation and advisory practice through acquisitions and recruiting top talent. Prior to CBRE, Sonne spent over nine years at C&W with Busi, who was there for 35 years.
Next level storage advisory
Sonne and Johnson, as co-leaders, have national oversight.
“(Steve’s) focus has been single assets and my focus has been portfolios and more institutional work so it’s a really nice blending,” Sonne said.
Johnson said he’s followed Sonne’s career and is glad to be on the same team.
“I have been following Chris for 15 years and we have always been friendly competitors,” he said. “This is a chance to take the self-storage valuation practice to a new level by combining our efforts.”
Busi said NKF sought Sonne for the new valuation practice because his reputation in the industry is unparalleled.
“Chris is one of the pre-eminent self-storage professionals in the country,” Busi said. “He has a depth and grasp of self-storage that is very unique, very specialized, and very high level.”
“Under this co-leadership format with Chris and Steve, we expect a tremendous amount of growth,” Busi said.
The practice currently has 19 team members spread out across the U.S.
“While NKF has had self-storage valuation experts through the years they had never been organized into a national practice until recently,” Busi added.
In close collaboration with NKF’s Valuation and Advisory self-storage practice, NKF’s Capital Markets Self-storage Group is headed by industry experts Aaron Swerdlin, Houston and Kenneth Cox, Memphis who have led the national investment group for nearly a decade.
“Having this much wealth of self-storage industry data and capability consolidated at one firm is an immeasurable advantage to our clients,” said Swerdlin. “NKF’s value proposition to the market is that whether it’s debt, equity, investment sales, lender appraisals, portfolio analytics and reporting for institutional clients, NKF is now the only firm to provide this client advantage.”
2019 still looks good
Newmark Knight Frank is bulking up in self-storage specialty valuation at a time when investors remain optimistic about the sector’s ability to outperform other commercial real estate sectors.
“You hear a lot of talk about oversupply or revenue not growing as fast (as CPI), but when you look at the sector, overall, it still outperforms all the other sectors,” Sonne said.
Economic headwinds such as trade disagreements with China and slowing global economic growth haven’t had any direct impact on the self-storage industry like they have on other industry sectors.
Concerns about supply in the self-storage sector have also been exaggerated although there are certainly trade areas that are negatively impacted, Sonne said.
“I think it is going to be a pretty solid year,” he said. “I think people are estimating that rent growth will be in that 3 to 4 percent range, maybe a little bit better in secondary and tertiary markets where there’s still some runway left for rent growth.”