How the REITs Compare Across Top MSAs
Imagine you have found the perfect self-storage facility to invest in (click here for resources on how to identify these).
Buying right is only half the equation to a successful deal. Now it’s time to execute on the business plan and produce a profitable investment. How do you decide the best way to operate a facility? When it comes to managing self-storage properties, investors have a few options.
- Self-manage: In this case, investors are more involved in the day-to-day decision making of the property. Investors can either maintain a regular presence at the property themselves, or hire onsite managers.
- Remote management: In this case, investors take a hands-off approach and automate every aspect of the rental process utilizing onsite kiosks, electronic locks, and online payments.
- Outsource to a third-party: In this scenario, all operations are handed over to a third-party in exchange for a monthly management fee. Many large and small companies offer this service including publicly traded storage companies.
So, which management solution is right for you? It depends on your goals. There isn’t a one-size-fits-all approach to every situation. Looking to scale and grow your self-storage investment business? Third-party management might be right for you. Looking to maximize profits and stay small? Perhaps self-management is something you should consider.
Now that we’ve laid a foundation about self-storage management, let’s narrow our focus to third-party REIT management. The top 3 publicly traded REITs in the industry (Extra Space, CubeSmart, and Public Storage) manage hundreds of facilities on behalf of other owners.
Below is a graph showing how many facilities each REIT manages.
As you can see in the graph above, Extra Space has over 2,000 third-party managed facilities, while CubeSmart is approaching 900 and Public is just over 300. The REITs have mountains of data and large marketing and revenue management teams, allowing them to set the trends when it comes to advertising, promotions, and existing customer rental increases (ECRIs).
Having the most third-party managed stores doesn’t necessarily lead to the best performance. Have you ever wondered if one REIT outperforms the others in a given market? Which REITs have the highest achieved rates in a given MSA? Should this factor into your decision when choosing a REIT to manage your facility?
Let’s explore the top MSAs and discover which REITs are achieving the highest rates, what ECRI trends are looking like, and where street rates are currently.
