Joseph Margolis, CEO of Extra Space Storage Inc. (NYSE: EXR), participated in a video interview at Nareit’s REITweek: 2018 Investor Conference in New York.
Margolis observed that the self-storage sector is in the midst of a development cycle, following a period of limited development after the financial crisis.
Markets that are seeing the most development are those with low barriers to entry and economic and population growth that has attracted developers, Margolis said. Markets with high barriers to entry—such as Los Angeles and San Francisco—are seeing very little development, he added.
Margolis described demand as “very steady,” driven by life events that occur in all different economic circumstances.
Meanwhile, Margolis said growth in its third party management business is being driven by developers, or their lenders, requiring professional institutional management to build the product. At the same time, the operational advantage of the big self-storage operators is getting larger, prompting smaller players to realize they can’t compete if they don’t team up with professional management, he added.