Market Update with Matt Bilger

Join me for an insightful analysis of the self-storage market. My guest is Matt Bilger, a seasoned commercial appraiser from Colliers whose expertise spans multiple asset classes.

I am surprised to hear that Bilger's appraisal assignments in the self-storage domain have dwindled due to a combination of heightened interest rates and stringent loan underwriting practices. This shift has not only reduced the volume of transactions but has also altered the investment strategies of regional and national buyers alike.

Investors currently exhibit a proclivity for acquiring single assets rather than larger portfolios, indicative of a cautious market sentiment.

We touch on the implications of inflation on rent increases. While inflation can deter discretionary spending among potential tenants, it simultaneously provides justification for property owners to raise rents in line with rising operational costs.

We then take a look at the multifamily sector, particularly in Columbus, Ohio, which is witnessing significant growth and development. Bilger attributes the city's success to its diversified economic structure, drawing attention to the burgeoning presence of major corporations contributing to job creation and population influx.

Top Takeaways

• The current market for self-storage assets is challenged by high interest rates and stringent underwriting by banks, which impacts loan availability.
• There is a noticeable reduction in refinancing activities as property owners are not seeking to refinance unless absolutely necessary.
• Local and regional investors are more active in the self-storage market, whereas larger institutional investors are adopting a wait-and-see approach before making significant acquisitions.
• The time required for properties to reach economic stabilization has increased, with projections now suggesting a timeline of 36 to 60 months for many facilities.
• Inflation has a dual effect on the self-storage industry, potentially hurting discretionary spending while simultaneously allowing for rent increases.
• Cap rates have been trending upwards, and there exists uncertainty regarding their future trajectory amidst changing economic conditions.

Thanks for following, subscribing and listening to this episode of The Do More podcast hosted by Jon Farling. To learn more or ask questions, go to l4investing.com.

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