Self-Storage Soars
Self-storage facilities are thriving, and investors have noticed. Marcus & Millichap’s Dave Knobler just closed two deals locally, the 468-unit Deer Park Storage and 338-unit A Discount Mini Storage, and tells us both benefited from strong buyer interest from all over the country. In fact, the latter (in the Garden Oaks/Oak Forest submarket) closed in only 40 days from hitting the market. (We've seen eBay auctions for old Chris Mullin jerseys last longer than that.) Dave says quick deals like that are becoming increasingly common, because early offers are already meeting sellers’ expectations. Dave’s got four more self-storage assets under contract across Houston, including a Pearland property that also was snapped up quickly.
It’s no wonder people want to build their portfolios—Dave says self-storage operators are doing better now than they were even two years ago. That’s partially thanks to demographics: 10,000 Baby Boomers (who tend to use self-storage) turn 65 every day. (Even if they all tell you they're 59.) Marcus & Millichap predicts vacancy will drop to 11.8% in Houston this year, well below the national average. (Our vacancy plunged 260 bps last year.) Meantime, rents will rise 3.4% to $126/unit at climate-controlled facilities and 4.4% to $90/unit for non-climate controlled. Last year, they rose 3% and 6.7%, respectively.
