With Limited Development, Self-Storage REITs Are In High Demand

6/8/2011 | By Matthew Bechard

Listed REITs have continued to gain market share in the fragmented self-storage sector, according to Ron Havner, president and CEO of Public Storage (NYSE: PSA). Of the approximately 45,000 self-storage facilities in the United States, the public companies only own about 10 percent.

Havner, NAREIT treasurer and executive board member, spoke with REIT.com at REITWeek 2011: NAREIT's Investor Forum at the Waldorf=Astoria in New York. He said that there has been little new development of self-storage facilities in the past 18 months, but the consolidation process has continued.

"The ability for public REITs to access capital is superior to the local owner operator. Each time a public company buys a facility it increases the public company's overall market share because there isn't new supply being added," Havner said.

However, one of the biggest challenges for public storage companies in today's market is that with limited new developments they are running out of space to meet customers' demand, according to Havner.

"It's a great problem to have, one we haven't had in a couple of years, but it's a situation we're finding, where in some markets we are simply sold out of space," he said.

As the demand begins to exceed the supply, he said that more self storage companies will begin to acquire or redevelop existing properties.

Public Storage, through the Shurgard brand name, is the largest self-storage operator in Europe. When asked about the differences between his operations in the United States and those in Europe, he said that even though the language and the culture are different, the self storage customer base is the same.

"Product awareness is less in Europe, but whether in Stockholm, Copenhagen, Paris or London, the behavior of the customer is the same," he said.