Self-Storage Expected To Continue Producing Strong Returns: How VanWest Is Letting Individual Investors Get In On The Action

Self-storage has been one of the top performing real estate sectors over the past 18 months, with demand outpacing supply in most of the top markets. While some investors may think they’ve missed the boat on the self-storage boom, data shows this sector is likely to continue producing strong gains and now may be the best time to get in on this high-yield asset class.

Self Storage Market

While real estate prices are up over the past 12 months across all sectors, self-storage has seen the most significant growth. According to the Green Street CPPI Index (which tracks current commercial real estate prices), self-storage has seen 66% price growth over the past 12 months, the highest increase across all tracked property sectors.

Demographic trends have been the primary driver behind the growth in the self-storage market in recent years, with increases in the number of people moving to suburban areas and into sunbelt states.

While these trends are expected to continue pushing the demand for storage units among renters, a few other factors will likely drive investor demand over the next several years and result in higher exit values for investments made in 2022.

Inflation: Many investors are looking at assets that will offer a hedge against inflation, and self-storage is likely to be one of the most resilient asset classes if the rate of price increases continues. Storage units typically have month-to-month lease terms, meaning operators can quickly adjust rents based on market conditions.

Low Correlation With Public Markets: Self-storage returns have historically had little correlation with equity and bond markets. The main reason for this is that storage units continue to provide consistent and predictable cash flow through all market cycles.

Value-Add Opportunities: Roughly 74% of self-storage facilities are owned by small operators, and many of these operators have inefficient management systems in place that result in lower revenue and higher expenses. This provides a significant opportunity for larger investors to acquire these properties at an opportunistic price, improve management efficiencies and see significant growth in revenue and net operating income.

One company taking advantage of these value-add opportunities is VanWest Partners, who currently manages two self-storage funds with properties across the U.S.

About VanWest 

VanWest Partners offers accredited individual investors the opportunity to benefit from the growth in the self-storage market through its managed funds. The company has an established track record with over $195 million in real estate assets.

VanWest’s wholly owned management company, ClearHome Self Storage, is also a top 50 self-storage facility operator in the U.S. and top 100 facilities owner in the U.S.

Self-Storage Funds: VanWest has now closed two storage funds, deploying $130 million across 23 properties. So far, both funds have beat projections in terms of revenue and net operating income (NOI) as of the fourth quarter 2021 updates.

The company intends to launch two additional funds during the second quarter of 2022. Interested investors are encouraged to join the waiting list since each fund is expected to fill up quickly.

Contact VanWest to discuss future offerings and join the waiting list

The fund’s strategy is to purchase and aggregate under-performing self-storage facilities in secondary and tertiary markets in high-growth regions of the United States, then implement its management and marketing strategies to increase cash flow and value for investors.

This strategy also allows the company to remain competitive if the supply of storage facilities increases. Since VanWest typically acquires properties at a discount to replacement costs, they have a lower costs basis and can charge lower rents than a newly built facility while remaining profitable.

Accredited investors can learn more about VanWest’s strategy and current offerings by visiting the company website.

Photo: Courtesy of VanWest Partners