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Story originally published on Sparefoot.com.
Public Storage spent nearly $430 million last year to buy 44 self storage facilities, and the REIT currently has a backlog of facility acquisitions. But the REIT also might be scooping up a fair amount of undeveloped land in 2020.
Speaking Feb. 26 to Wall Street analysts during the REIT’s fourth-quarter earnings call, CEO Joe Russell said Public Storage is keeping an eye this year on some “attractive” opportunities to purchase raw land for new facilities.
“We’re seeing good land sites that are coming to us,” Russell said. “Frankly, we’re seeing more of those right now than we have in the last two or three years, because there is a little bit of rewinding relative to some of the spec development that has been going on in certain markets.”
In 2019, Glendale, CA-based Public Storage opened 11 newly developed facilities with a total price tag of $379.1 million. As of Dec. 31, it had 1.3 million net rentable square feet under development at a cost of $209 million.
This year, Public Storage also envisions capitalizing on new-facility owners who are eager to leave the self storage market, particularly those whose financial projections are failing to work out. Russell described this as a “vibrant arena” that’s keeping the company’s acquisition team “very busy.”
“There are a lot of entities out there who are looking for exits,” he said.
“If you don’t have the right playbook to deal with supply as it impacts particular assets — right down to that three- to five-mile trade area — you could definitely have some pretty strong headwinds to deal with,” Russell added. “Frankly, that’s where we continue to see … some of our acquisition opportunities.”
While Public Storage considers ramping up its facility and land acquisitions in 2020, it’s also weighing whether to crank up spending on marketing.
In 2019, marketing expenses shot up 47.2 percent ($15.3 million) compared with 2018. This year, Public Storage might keep its foot on the marketing pedal, including Google and social media advertising.
“As we head into 2020, I would anticipate that if we continue to like the incremental traffic that we’re seeing from the advertising spend that we’ll continue to spend. And so far in 2020, we continue to like what we’ve seen,” said Tom Boyle, senior vice president and chief financial officer.