An aspiring actress, a college student and a cleaning supply company have all recently discovered the need for self-storage.
Chantelle Underwood worked as a hostess and podcaster in Los Angeles, but opportunities were few and far in between. Fortunately, she was offered a broadcasting job in South Carolina. She decided to put her motorcycle into self-storage.
Her brother Michael had just started his second semester at UC Irvine when he decided to move back home to Colorado. All of his belongings also went into self-storage.
The initial outbreak of the coronavirus in January led to a slowdown in the hospitality and services industries. For GMC Supply, demand for cleaning supplies completely dried up when hotels, restaurants and salons closed their doors in March. The El-Monte, California-based business had to pivot their business and migrate online by selling personal protective equipment (PPE) and cloth masks on Etsy. They downsized from a 15,000-square-feet warehouse into several self-storage units.
“We discovered that self-storage gave us more flexibility and helped us save money,” said Emily Moon, owner of GMC Supply. “We can now add or reduce space as needed.”
In an industry where operators and tenants usually sign month-to-month leases, the economic uncertainty has led to an unprecedented influx of long-term tenants for self-storage. Businesses have reduced office space and are moving their equipment and supplies into self-storage. Employees working remotely are clearing out their garages to make room for home offices. Existing businesses and new startups have found a more cost-effective way to store their inventory.
While not completely immune to the effects of COVID-19, the self-storage industry has proven once again that it can be quite resilient through the downturn and is likely to outperform during the recovery.
In fact, the self-storage asset class has achieved an average annual return of 16.85% over the past 25 years, according to the National Association of Real Estate Investment Trusts (NAREIT). Self-storage has outperformed apartments (12.93%), retail (12.04%), office (12.15%), and the S&P 500 (7.06%) over that same time period.
It is in this environment that Reliant Self-Storage Management has announced plans to launch Reliant Self-Storage Fund II, a $50 million fund to acquire and develop a diversified portfolio of self-storage properties across the United States.
“We have five properties that we currently have under contract and additional properties that meet our underwriting standards to deliver a diversified offering to our investors,” said Todd Allen, managing principal for Reliant Real Estate Management.
“We believe that the current economic uncertainty will produce some of the best buying opportunities of the upcoming real estate cycle,” added Kris Benson, chief investment officer.
While the pandemic is perceived as a disruption to consumer behavior and business operations, analysts are seeing positive impacts and trends in the self-storage industry.
The ongoing migration out of large urban centers like New York and Los Angeles will lead to demand for self-storage in suburban and rural areas. Retailers shutting down may give self-storage operators the opportunity to revitalize vacant structures and transform them into viable self-storage centers. E-commerce giants like Amazon, Overstock.com and Wayfair manage their warehouses in terms of cubic feet instead of square feet. This will introduce new performance metrics for the self-storage industry.
“We are preparing for those opportunities now by building equity commitments to ensure we can act quickly when these opportunities present themselves,” Allen explained.
Reliant Real Estate Management offers premium self-storage and moving services with 48 locations in Alabama, Arizona, Colorado and Florida, Georgia, North Carolina, South Carolina and Tennessee. Reliant continues to aggressively seek opportunities to acquire self-storage properties, development sites or buildings suitable for conversion to self-storage.
To learn more about Reliant Self-Storage, please visit https://realestateinvestors.io/ and https://xmware.com/signup/reliantselfstorage/.
Originally published on September 9, 2020 at https://www.usatoday.com/story/sponsor-story/reliant-real-estate-management/2020/09/09/self-storage-industry-displays-resilience-amid-pandemic/5746415002/