In self-storage markets, scattered signs hint of a slowdown. In cities such as Columbus, Ohio, customers can get the first month's rent for $1. Shares of the average self-storage REIT lost 3.4% in the first four months of 2007, according to the FTSE NAREIT Equity index. With housing sales falling, some investors worry that fewer homeowners will be storing lawnmowers and computers.
So is self-storage about to suffer a crash? Probably not. While the industry has little data on total vacancies, some markets clearly remain strong. Customers searching the Internet can find few discounts in cities such as San Diego and Boston. Overall, the national picture appears mixed, say industry experts.
Analysts feel few markets suffer from saturation. “Some companies report that demand is a bit weak, but others are showing decent same-store sales,” says John Sheehan, a securities analyst for brokerage A.G. Edwards & Sons in St. Louis.
Extra Space Storage Inc., a REIT in Salt Lake City, is typical of owners that are reporting so-so results. The company expects its net operating income to grow about 5% this year. That is down around a percentage point from the results of 2005 and 2006. “After two strong years, we are seeing a slight slowdown in 2007,” confirms Kent Christensen, executive vice president of Extra Space.
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source: nreionline.com
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