Publications

- April 1, 2021: Vol. 33, Number 4

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Core storage: Self-storage outperformance gains notice during pandemic

by Larry Braithwaite and Cassidy Toth

COVID-19 has firmly cemented self-storage’s place in the conversation about core real estate property sectors. Within the past decade, the rapid growth in self-storage inventory reflects not only strong growth in use among the overall population, but also strong and growing investment interest from public and private institutional investors. The sector boasts enviable attributes, resulting in net operating income (NOI) growth with modest volatility and total returns that have exceeded each of the four major core property types for nearly 15 years. These superior investment returns have been aided by the sector’s high operating margins and limited ongoing capital expenditure requirements. Furthermore, superior rent-roll diversification mitigates single-tenant credit risk, while inelastic demand from sticky tenants and modest relative supply have helped contribute to landlord pricing power and long-term NOI growth. Although many of these attributes have been widely recognized over

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