Thanks to the acquisitions market’s lack of existing class-A and class-B self-storage facilities in 2016, the storage industry experienced an extraordinary uptick in new development this year. With new lenders and investors eager to supply the capital, storage developers have been hatching numerous plans for ground-up projects across the United States.
While strategic new development is necessary in areas with ample storage demand, so much new self-storage supply has come on line in 2017 that many industry veterans are concerned that storage developers may be flying too close to the sun. Like Icarus with his wings of feathers and wax, developers who aren’t doing enough due diligence are putting some of the top MSAs at risk for overbuilding. As a matter of fact, declining occupancies and longer lease-up times for new facilities are already being reported for several of the country’s major markets.
By Erica Shatzer