The long term average return table found on page 14 is particularly noteworthy with self storage outperforming each other asset class for the 5 year, 10 year and 15 year periods. Self storage enjoyed an 18.9% return over 5 years, beating apartments on 14.9%. Over 10 years, self storage averaged 20.5% with apartments next best again on 16.4%; and over 15 years self storage was 16.5% while retail comes second with 14.4%.
The CW report also provides operating and investment analysis over time. The rental rates, occupancy and capitalisation rates have been tracked back to 1995, shown in graphs.
Self storage portfolio sales volume have increased to over 40% of the years transactions in the USA. In addition, the “Portfolio Premium” in value being observed has seen capitalisation rates approximately 100 basis points strong than for single asset trades. The report quotes “Class A Facilities” seeing a Capitalisation Rate of 6.55%. This is stronger if in a portfolio.
For anyone interested in the investment characteristics of self storage, the CW report is comprehensive look at the performance of the industry in the USA. Much of the themes relate strongly to self storage in Australia and New Zealand, though context should be given to differing funding costs which will influence return expectations.
Read the full report here: CW Quarterly State of the Market Self Storage Webinar Presentation
Author: Sam Kennard, Managing Director, Kennards Self Storage