TRANSCRIPTION 🔗
Speaker 1:
0:00
Hey everybody, welcome to the Storage Investor Show, the go-to podcast for self-storage investors looking for market insights, trends and strategies to grow their portfolios. I'm your host, chris Bennett. Today we're gonna be diving into the Southeast self-storage market what's hot, what's not, and where the best investment opportunities are shaping up for 2025. If you've been following the national self-storage trends, you know that rents have been in decline for a while. It's been kind of rough out there, but the good news is that those declines are slowing down, if you can call it good news. That said, not all markets are recovering at the same pace. Some are showing strength, while others are struggling under the weight of oversupply, which is always a problem. It seems like every time I look at a deal, there's three or four new developments nearby, which makes it difficult to put those rent increases in the pro forma. So where should you put your money? Let's break it down Some of the winning markets where rents are rising. We're talking about Tampa, florida, raleigh, durham, north Carolina and Nashville, tennessee. Let's start with Tampa. Tampa is the strongest market in the Southeast right now, with rent growth of about one positive 1.7% year over year, which is impressive considering how much new supply has hit the market. What's keeping Tampa strong with all that new supply is hurricane-driven demand, strong population growth and a healthy balance between supply and demand. Those are all critical factors, right? So you got hurricanes that have come through in the last, probably a couple of years. If you can remember back to that time, you saw a positive population. Well, the hurricane demand is driven by the fact that people need places to put their stuff while they're fixing their house or whatever. You still have population growth, which is really good. We always look for that and you have a decent balance between supply and demand. Uh, you know, we obviously don't want more people building stealth storage facilities, but if you keep that in check, it's okay. It works out right. So the population growth will balance those things out. So if you're looking to buy some stabilized assets, tampa is probably one of the best places to invest right now, which is great.
Speaker 1:
1:51
Next up, raleigh-durham, north Carolina, the market is holding steady. Rents are flat year over year. No real growth there at 0.0%, but that's actually a good thing given the nationwide slowdown. If you can believe it, raleigh-durham has a strong local economy, which I can attest to that we lived in Cary, north Carolina, for a while, which is kind of like a suburb of Raleigh. It has a good growing population and manageable supply levels. I do remember a few years ago where Raleigh-Durham was a bit oversupplied, but we've got population growth. There's three great universities there University of North Carolina, chapel Hill, duke University and NC State, among others, but those are the top three schools in that area. So that brings in a lot of students, a lot of jobs, a lot of families, a lot of good population growth. It is a great long-term hold market if you are looking for stability over the next several years.
Speaker 1:
2:40
Next up and lastly is Nashville, tennessee. Nashville is down 1.7% year over year. But there's a silver lining here. It has one of the lowest new supply levels in the region. Only 3% of existing inventory was added in the past three years. That means rents should start stabilizing and potentially rising again soon, which is good. If you're looking for an early entry point before the market rebounds, keep an eye on Nashville. Look at some deals in that market. Always a great market.
Speaker 1:
3:08
All right, let's transition over to markets to watch. There are some oversupply issues in markets like Atlanta, georgia, orlando, florida and Charlotte, north Carolina. Before we get into that, check out our sponsor. They make it possible to put these podcasts out. Radius Plus they are our sponsor for this episode. Check the link in the description. I use them every day. You should too, radiuspluscom. Check the link in the description.
Speaker 1:
3:32
First up, atlanta, georgia. Atlanta is the worst performer in the Southeast right now. Rents are down about negative 4.2% year over year, which is a huge drop. I'm sure nobody underwrote that in their pro forma. It's being driven by oversupply. Over 12% of the market's total inventory was added in the past three years.
Speaker 1:
3:52
And real quick, I have allergies, so if I'm talking kind of funny, that is why, apologies, let's get back to it. There are just too many facilities competing for attendance. Right, if you have a, it's not really fixed because the population is generally growing there, but you have that much new supply. It's adding more space. That space isn't all used up as quickly as we all anticipated or as developers anticipated, and that causes that drop in rents while they're trying to entice customers to come and rent self-storage, and so that's what's going on and that's what's pushing rates down, that competition from new facilities. So if you're investing in Atlanta, you want to wait for the market to stabilize, possibly, or look maybe for some distressed deals right? I just saw a post the other day on LinkedIn someone talking about that very thing. Who's in the banking industry right now? I'm not saying self-storage is going to see that too much, like other asset classes, but there may be some opportunities out pick up some deals that are in a bit of distress, which would be a good thing for you if you're buying.
Speaker 1:
4:46
The next step Orlando, florida. Orlando is another market that's oversupplied. Rents are dropping minus 2.0%, so 2% year over year. Similar to Atlanta, has too many new facilities, right Oversupply. 12.8% of total
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inventory has been added over the past three years. That is a lot of inventory. It's just almost too much. So the excess inventory has to get used up, has to get occupied and absorbed. Is what they call it absorbed in order for those rents to recover, or we need a huge population boom to offset that new supply? Next up and lastly is Charlotte, north Carolina. Charlotte is down minus 1.9%, almost 2% year over year, which isn't as bad as those other two markets, atlanta and Raleigh, but still it causes it to struggle a bit. We have a massive 12.6% increase in new supply. It's keeping rates low until all that is absorbed, which will take another probably year, year and a half or so.
Speaker 1:
5:42
So if you're looking in Charlotte, make sure you get a good deal on whatever deal you're trying to buy. There's always markets like when I say, when we talk about Charlotte, orlando and Atlanta, there's always going to be pockets where a deal is going to make sense. Perhaps a seller has a reason to sell. They give you a good price on that deal. So I'm not saying don't ever buy these markets, don't buy these markets right now. I'm not saying that at all. There's always an opportunity. If you like that market, you like the story behind it, keep fishing. I'm sure something will turn up that makes Some of the best buying hold.
Speaker 1:
6:18
Markets right now are the ones we mentioned Tampa, raleigh-durham, nashville good, strong demand, good population growth and manageable new supply pipelines Markets to watch out for. Like we mentioned, atlanta, orlando, charlotte. They're a bit oversupplied, which is going to keep that rate growth soft. For the next call it maybe a year, year and a half, maybe two years or so. Nashville is looking like a good market to be in on the rebound, the flat rate increases. It may be a good entry point, early entry point, for new investors or investors wanting to get into that market, which is obviously fantastic.
Speaker 1:
6:49
All right, so let's wrap it up with some actionable steps. Obviously, in this episode I focused on the Southeast because that's where I'm looking for deals right now, so of course it's going to make sense to me. There's other good markets Washington DC, I think, out in California. I forget which market was in California, I can't remember now off the top of my head, but there's other good markets out there, and I based all this on the recent Yardi Matrix report that came out in February, looking at January's data. So keep that in mind as well, that by the time you hear this episode, some of that data and inputs may have changed. Check out yourardymatrixcom for the latest information on the self-storage market.
Speaker 1:
7:28
If you're looking to buy stabilized, look at Tampa and Robbie Durham. If you're looking for new development, be cautious, excuse me. If you're considering new development, be cautious of developing anything new in Atlanta, orlando and Charlotte, because oversupply is a bit of a risk. If you're looking for some value-add deals, atlanta and Orlando still may be a good bet, because you might be able to find something that somebody wants to get out of right. So maybe you get a decent price on that and then reposition the deal or just kind of buy it, hold it and wait for the future, which is a viable strategy. All right, if you want more insights, deeper analysis and real-time investment strategies on acquisitions, development in self-storage and I'm looking at small bay industrial flex warehouse space check out and subscribe to the Storage Investor Show newsletter over at storageinvestorshowcom. Link is in the description. That's it for today, guys. Thank you for listening. Please like, subscribe and share Until next time. I'll talk to you later.