Demand for self-storage is near an all-time high – utilization rates by the Millennial generation are higher than any previous cohort, and the COVID-19 pandemic accelerated interest in outdoor activities like camping, which is a boon to storage demand. As a result, what was previously a niche asset class dominated by a few REITs and a slew of ‘mom & pop’ owner-operators is now catching the attention of middle-market and institutional investors. Corridor is no exception, having closed our first self-storage acquisition in March 2022. Investors are now racing to acquire well-located storage facilities from the remaining ‘mom & pop’ owners while they’re still available. This opportunity has largely surpassed other defensively oriented asset classes such as multifamily and industrial. Per CBRE, 41% of investors are now pursuing self-storage investments, and acquisitions of self-storage facilities nearly tripled in the last year to $17.2 billion, up from $6.4 billion the year prior.
The race has now become more crowded, as Barings, the $391 billion global investment subsidiary of MassMutual, has entered into a joint venture with Canvass Capital to buy and develop self-storage throughout the southeastern U.S. The partnership plans to invest up to $250 million in the space by expanding existing facilities acquired from ‘mom & pop’ owners and ground-up development.
Middle-market investors interested in breaking into the self-storage sector will need to act quickly, or risk missing the boat. As more and more behemoths like Barings enter the space with boatloads of capital, competition will intensify, and pricing will be driven up.