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Matt Van Horn is a self storage industry veteran, being involved for over 20 years. He is also the founder of Black Swan Storage Advisors, a full service Self Storage Operations Company specializing in Feasibility Studies, Underwriting & Investment Analysis, Site Selection, Facility Management & Operations, Revenue Management, and Training within the Self Storage Industry. 

Episode Highlights:

- The 5 largest self-storage REITs own approximately 30% of the self-storage industry across the country. In the past 1 to 2 years these REITs have started offering property management services, which serves as another channel for future acquisitions to grow their portfolios.

- Demand for self-storage is expected to be strong for the next 4 years. However, as long as there’s demand, new development will catch up with demand, eventually saturating the markets. We are currently in a development cycle. The last one was from 2003 to 2006. 

- To determine the market saturation, you need to look at a radius from the target property. If it’s highly urbanized such as Manhattan, the radius is one city block, but if it’s in a suburban area, the radius increases to 3 miles. For RV and boat storage the radius can increase significantly. However, there’s no clear demand data established for RV and boat storage at this time.

- Rent is typically measured on a rent per square foot basis. Using this metric, the rent per square foot is typically always lower for RV / boat storage compared to self-storage. This difference is driven by the fact that the different unit size mix in self-storage increases the overall average rent per square foot, while RV and boat storage units are all large, so rent is allocated over a larger surface area.

- One of the most important drivers for determining feasibility is the convenience and what population you’re going to draw tenants from. In self-storage there is no brand loyalty, which results in tenants renting from the self-storage facility that’s nearest to their home or work. Even if there’s enough population in your specific market, if a potential tenant must drive past 7 other self-storage facilities before getting to yours, then they are not going to rent from you. 

- The self-storage industry has experienced significant cap rate compression with Class A properties in primary markets (i.e., the top 50 MSAs) ranging from 3.8% to 4.5%, and secondary markets ranging from 4.55% to 5.5%. Class B properties have been averaging 6.2% and the industry overall has been 6.1% on average. 

- Although there is a lot of focus on the deal and acquiring the property, an often overlooked step is determining how to manage the facility after closing on it. 

Helpful Link and Best Way to Contact Matt:

https://www.blackswanstorage.com/