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Introduction
Basic investment strategy is to buy at the bottom of a
real estate cycle and to sell at the top. The impact of
cycles on real estate performance and therefore wealth
has proven to be extremely important if the investor
wants to outperform the competition and beat the market
averages.
Outperforming the Competition and Beating the Market
Averages
The Texas Self-Storage Market Survey will help
self-storage owners do both-- outperform the competition
and beat the averages by helping them see where their
local self-storage market falls within the real estate
cycle. Contrary to popular belief, not all markets are
in the constant state of expansion. All real estate
markets pass through four phases: recession,
recovery, expansion and contraction. Real estate
returns, risks and investment values are impacted by
where the market is in its cycle.
The Texas Self-Storage Market Survey is the only source
for the information needed in order to be aware of a
specific market’s position in the cycle, i.e., are
conditions likely to improve, or is the market about to
become overbuilt. The 2010 survey marks the sixth year the survey has
been conducted, and now the local market trends are
emerging that will help owners understand the local
market conditions.
For over 30 years, we have been adding to the existing
supply of space. Now many markets have passed the point
of balance between the supply and the long-term demand.
In the past, the only tool for measuring demand has been
studying the number of square feet per capita. As long
as demand is measured in this way, the markets will
continue to be overbuilt. The Texas Self-Storage Survey
provides a statistically reliable alternative tool for
measuring demand--a third-party generated unbiased
report that tracks performance over time.
How to
Benefit from the Survey
The people who will benefit the most from this study
will be those who have a facility located in a market
where a lot of operators participated in the survey.
Therefore, don’t just submit your own data, but
encourage your competitors to do the same.
Knowing the national or regional market conditions are
interesting, but what is happening in Dallas, Houston or
Austin is of little help if you operate outside a major
market area. Owners can no longer operate in a bubble
and expect to remain competitive. The markets have
become so competitive now that supply has reached its
current level.
While your facility might be performing well currently,
that does not mean it will continue to do so in the
future. The purpose of the survey is:
• To help owners and others to understand the direction
a particular market is headed. Is it just marginally
overbuilt, or is it becoming severely overbuilt?
• To provide owners the tools to allow them to measure
their facility’s performance against a benchmark of
other operators.
• To help the owner who is having problems raising rents
and maintaining stabilized occupancy to know if it is a
management problem or a market problem.
• To provide owners with the knowledge about the trends in
concessions and discounts.
The Study
The Texas Self-Storage Survey contains comprehensive
data on Texas’ 26 Metropolitan Statistically Areas
(MSAs) as well as on the rural markets. However, the study
is only as good as the data that is
contributed. Again, talk to your competitors and encourage them
to participate. The data remains confidential and only
the aggregated results are reported. Helping to prevent
local markets from becoming overbuilt is a win-win for
everyone. Developers certainty don’t want to learn too
late that demand has already been satisfied. Existing
owners will be better prepared to protect their
investment by knowing in advance that they will need to
budget for additional advertising, and for the cost of
having to offer more concessions in the future.
Your association is working to help its members protect
their investments by providing information not available
anywhere else. By participating in the survey and
encouraging your competitors to do so as well, everyone
benefits.
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