This week Commercial Property Executive announced that U-Haul Moving & Storage has expanded into the Baton Rouge market. Acquiring a former self-storage facility in the city’s northeast sector, U-Haul has added 10 buildings with over 60,000 square feet to its Baton Rouge footprint. Prior to the recent acquisition there were only 55 U-Haul-owned storage units in the market. This led us to start thinking about the future of Louisiana’s self-storage sector, and whether this recent CRE investment is just one of many transactions, and developments, to come.
In the below post we take a closer look at the benefits of ownership and assess whether now is the time to add this real estate investment to your portfolio.
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Self-Storage in Baton Rouge, as a CRE Investment
As a commercial real estate investment, self-storage facilities are highly attractive in many ways, especially in an uncertain economy. Below find just a few of the best features of a self-storage CRE investment.
Good economy (more stuff to buy, need storage) or bad economy (downsize, need storage), the demand for self-storage in Baton Rouge is always present. From home and business downsizing, to second homes and college students home for the summer, this CRE investment is always needed.
Out of all the different types of CRE investment, this type of investment has the lowest default rate. Even with its often short-term contracts, self-storage occupancy rates are pretty stable with low turnover, and aren’t tied to economic conditions. Another plus is that you don’t traditionally have any risky tenant issues, like you would when owning multi-family assets.
Self-storage facilities have much lower development and operating costs than other CRE sectors, given the type of build-out required. From utilities to management and maintenance, operating costs are also much less than retail, office, or multifamily simply because there is less to maintain.
Recent Self-Storage Data
Marcus and Millichap recently released its 2016 Self-Storage Investment Forecast. The lengthy report outlines national self-storage performance trends and provides a thorough investment overview. Below find some excerpts from the research:
- “The self-storage expansion cycle will likely persist through 2016 as steady job growth supports unit demand.”
- “Occupancy and rent levels are both expected to rise in the coming year.”
- “Positive economic environment and demographics sustaining multi-family demand is also boosting the self-storage sector.”
- “Historically low rates have equipped self-storage investors with considerable purchasing power and positive leverage, supporting a steady rise in valuations.”
Ready to Add Self-Storage to Your Investment Portfolio?
If you were already thinking about it, or if this post has piqued your interest, contact one of our many Advisors who specialize in this type of self-storage in Baton Rouge and surrounding areas. While it may be the safest bet in commercial real estate investing, you should always work with a CRE professional before signing any purchase agreement. Protect yourself, contact us today; we look forward to assisting in all your CRE needs.
About Us – The team at SVN | Graham, Langlois & Legendre has over 99-years of combined experiencing helping clients across the Baton Rouge area get the most value out of their CRE investment. Contact one of them today with any questions you may have and start seeing the returns in a market that will make sure to give today, tomorrow and for the extended future. To reach us, you can call us at 225.367.1515 or you can send us a message on our website. You can also follow us on Twitter at @svngll or on Facebook.