Self-storage returns are decreasing. Is it time to panic?
Self-storage has been a super commercial real estate performer in recent years. In 2010, self-storage REITs delivered returns of about 29.29 percent; in 2011, 35.22 percent and soured to 40.65 percent in 2015. In 2016, however, total returns were down 8.14 percent.
A major reason is the increasing supply of new-build, chasing the ‘pot of gold’. Also, the sector is facing is resistance by local authorities because of a negative stigma attached to the property type. New builds are addressing these concerns by producing more attractive self-storage, and adding other uses, especially retail spaces, to the build.