In recent years, public real estate investment trusts and large private storage operators have been rapidly purchasing independent storage facilities to create consolidation within the storage industry. Consolidation is occurring largely because new facilities are not being built, prompting the large leading companies to purchase smaller facilities. Self-storage development has been slow since the economic recession, but experts believe it will speed up within the foreseeable future.
StorageMart ranks number nine out of 10 on The Inside Self-Storage Top-Operators list. There are only two privately-owned storage facilities on this list– StorageMart is one of those two companies.
This high ranking provides the company with the opportunity to increase their market share by purchasing smaller facilities, which means StorageMart’s potential for acquisitions is very high right now. However, this is a business venture that cannot happen all at once.
In the article “Are Self-Storage REITS Moving Toward Consolidation?” from Benzinga.com, the author explains that acquiring enough facilities to make a large change in the industry would take considerable effort. While the top ten leading operators do have the power and influence to make industry-wide changes, acquiring private facilities is still an enormous feat.
The Benzinga article goes on to give the following statistic: There are over 50,000 self-storage facilities in The United States and 30,000 operators who account for $24 billion. Approximately 11 percent of the industry’s rentable square footage are public self-storage REITs and 89 percent are privately owned.
As a top-ten company, StorageMart acquired eight new facilities in 2015 and while this might seem like a low number, this type of gradual acquisition and development is exactly the way for any leading storage company to acquire more independent facilities.
Private storage operators can actually benefit from this trend of acquisition by establishing a third-party management system. Amongst other benefits, third-party management allows storage REITs to save money on management services, increase efficiency, and gain more asset flexibility.