07/12/2023 - Exploring Self Storage as an Asset in Commercial Real Estate Crisis

Self-storage is discussed on our Multi-Family Training Call by Matt Perry and CG Trainer Scott Meyer as a desirable asset class that is seeing rising interest as commercial real estate values decrease. Self-storage transactions’ potential dangers and benefits are examined, and forecasts about a prospective recession are made. Timing, speed of execution, and value generation are underlined as important factors to take into account while assessing agreements. Specific topics are talked about as well, such as:

· How has the downturn in commercial real estate and the increase in interest in RV parks and self-storage influenced the pool of investors for this sector
· What opportunities are currently being observed in the self-storage space, considering the potential lower risk compared to other deal sizes
· How do you determine the exit cap rate for self-storage deals, and what factors are considered in making this determination
· Is timing more crucial than reaching budget and cap rate criteria when evaluating deals, especially in new development projects
· Have solar projects been turned down because of how they would affect internal rates of return (IRR)
· What factors still make a good deal in the commercial real estate space, and how can the value of a property be raised
· How are lenders responding to the current market conditions
· How does inflation impact the self-storage market, and what are the market rates expected to do in response to inflationary prices
· What are the important questions to ask banks looking for self-storage opportunities
· How does liquidity requirement play a role in self-storage deals, and how do participants educate lenders to ensure their money is utilized effectively