Overbuilding: Is it Happening to You?

It has been suggested over the last several months that now is a good time to buy, sell, develop or refinance. Sounds good all the way around, RIGHT? Today’s strong market fundamentals and very liquid lending market have made good deals even better, and the cash on cash returns are simply staggering for owners, buyers and sellers alike.

We have all seen the comparison of self storage to other real estate sectors over the last few years and in short, the returns are higher and the various risks are more moderate with the one exception: overbuilding. Obviously, the general market fundamentals around the country are very compelling for new self storage development, but as you dig into each potential self storage development site, make sure that there are not several other projects coming online in your respective markets. Self storage development appears to be clustered around the same areas in the country that share similar demographics.