Self-storage operators are in the thick of navigating new supply amidst record levels of new storage development. But in 2020 operators in certain markets should start to see new supply pressure ease off, according to CubeSmart CEO Christopher Marr.
“A fairly universal thesis is that 2020 supply in the top MSAs will decline from current levels and markets with strong demographics and low square feet per capita will bounce back more quickly from the impact of supply,” Marr said during the company’s first quarter earnings call with analysts.
That may happens sooner in some markets than in others.
“We do see some signs of life in those markets such as Austin that saw new supply earliest in this cycle. Based on current data, those markets that saw supply earlier in the cycle also appear to have the sharpest drop in anticipated 2020 deliveries,” Marr said.
Marr also highlighted the company’s New York portfolio as performing well in an elevated supply environment.
“While we do continue to factor in gradually increasing supply impact on our Brooklyn portfolio through 2019. The Bronx, similar to my previous commentary regarding markets that experienced new supply early in the cycle experienced solid quarter-over-quarter growth in both occupancy and asking rents,” Marr said.
Other markets, however, are still dealing with the challenges of new supply. Marr said that Miami, Denver and Charlotte will remain operationally challenged heading into next year, even though 2020 deliveries are expected to decline.
“We do expect the growth rates to improve over the course of the year, However supply will continue to weigh heavily on operating fundamentals,” Marr said.
- CubeSmart opened two new stores, one in Queens, NY and the other in Bayonne, NJ. The company also is adding a new development project adjacent to its existing location in Arlington, VA that is expected to benefit from Amazon’s East Coast headquarters.
- Same-store revenue grew 2.6 percent during the first quarter compared to the previous quarter.
- Same-store net operating income rose 2.2 percent during the same period.
- Total revenue for all stores generated $152.85 million in revenue during the quarter, a Y-O-Y increase of 7 percent. NOI for the total portfolio increased 7.8 during the same period, totaling $101.42 million.
- Period-end occupancy was 92.1 percent, the same as it was at the end of the first quarter last year.
- Realized annual rent per occupied square foot reached $16.74 for the first quarter, up more than 2.5 percent from the same period last year.