State of the Market 2023 Operations

We wanted to do a kind of “state of the market” just to let you all know what we're seeing and hearing out there as it relates to operations, capital markets and investment sales. So we'll start with the boots on the ground. Now, everyone from the REITs in their quarterly reports that just came out all the way down to the mom and pop owner operators that we speak with on a daily basis seem very optimistic about both current and future operations and property performance, especially down here in Texas.

I'll admit that physical occupancies have dropped a little bit, but it still seems like everyone is in the low to mid 90% range instead of that mid to high 90% range that everyone was experiencing over the past few years. But that is certainly still better than the vast majority of property types in commercial real estate. Similar to occupancies, seems like street rates are down slightly over the past few months, and I know most operators aren't projecting incredibly aggressive rate hikes into the future, but that's really just a return to normal. The 10%, 15%, 20% rate hikes year over year, were just not going to be sustainable. So, the interesting thing about COVID was that it kind of disrupted the normal seasonality that everyone had grown accustomed to in the storage industry.

And like I said, now we're just returning to normal. Some people who are newer to the industry might be a little bit concerned right now that their properties aren't just improving month over month, but the vast majority of operators realize that, hey, just like they were accustomed to 2019 and before, the summer months are going to be great for leasing and rate hikes, but the winter months are going to be a little bit slower.

Fortunately, especially down here in Texas, population growth and demand for storage are very steady and the future continues to look bright.