Development of new self-storage centers may gain pace amid robust business conditions.
The stock price of publicly traded industry leader Extra Space Storage Inc. increased 33 percent during the first 43 weeks of the year while the S&P 500 stock index dropped 2 percent.
Carlyle Group, LP, has committed $80 million to help build new storage centers in Southern California, the Pacific Northwest and other regional markets.
Charles Byerly, CEO of Irvine, California-based storage center operator Westport Properties Inc., told the Wall Street Journal, “It’s a good business to be in.”
Westport operates 80-plus storage facilities under the US Storage Centers brand in 13 states.
Industry participants say four life changes for good or bad sustain the market for storage space. The “four D’s” are death, divorce, downsizing and dislocation via marriage, employment and graduation.
Steady demand for storage space persists despite lackluster employment growth, and rents are rising.
Salt Lake City-based Extra Space reported a 94.5 percent occupancy rate at the end of the second quarter, an increase from 92.1 percent a year earlier.
The industry’s largest publicly traded company, Public Storage, has reported a 7 percent rise in rental income, year over year.
In addition to the storage centers Carlyle is constructing, Public Storage has planned 3.9 million square of new storage space development.
But some communities resist development of storage centers, and new units can take years to build. Extra Space needed more than a decade to get one storage center built in Southern California. [Wall Street Journal] — Mike Seemuth