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28 Feb 2024

REIT Rates, Do We Care?


Everybody is talking about the REIT pricing strategy, slashing asking rates, making investing difficult. Let’s look at it from a slightly different viewpoint.

We’re actually seeing an increase of rates in areas that when you first look at the numbers they look like they’re in distress- but when using those areas as a basepoint, we will be able to find pockets of potential investment opportunities!


Everybody is talking about the REITs new pricing strategy and how it's making self-storage investing kind of difficult. It's hard to find a market with positive demand for self-storage when rates only going down. But good news, we've actually found that markets that are seemingly in distress are actually places of self-storage demand and rates are proving it too. So let's start off by going to Advocate, our rental rate tracking platform. So what we see here is the content of the United States for the top 100 markets broken down by asking rates for 10 by 10 climate control units. I'm looking at the top four public REITs as well as private company data. So what we're going to do is narrow down in a market that seemingly looks like it's not doing great. So with Mobile Alabama, I'm able to take a look at spot pricing and I'm going to grab these data points and put them on a spreadsheet. So from here, I can get in the weeds and actually see what's happening with demand. So I'm comparing pre-pandemic numbers. So the average asking rates in 2019 compared to 2023 to see has demand increased from pre-pandemic numbers till now. So when we analyze private companies against, let's say, public storage, a market that is seemingly down 13% in asking rates is actually the opposite. Private companies have been able to perform 6.8% higher from 2019 to 2023, while public storage has increased by a whopping 16.8%. So when we look at these rates holistically, it doesn't tell us the full picture. But diving into the weeds, we understand that demand is on the rise here. So my next step will be to jump into RADIUS, look 10, 15 miles outside of the main area, and find some golden opportunities for self-storage investing. So stay tuned for a part two where I show how RADIUS fills in the gaps. And thank you.

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