Commercial Investment Real Estate September/October 2017 | Page 8

MARKET
TRENDS
2017 Self-Storage Continues
Sunny Forecast
=
“We have been spoiled for so long by low
interest rates in commercial real estate.
Currently, we have to reset expectations for
target returns, but there’s still lots of capital
out there, both domestic and abroad,
that appreciates the value and sta-
bility of U.S. commercial real estate.
It remains to be seen, but concerns over
volatility in the public REIT market may turn
out to be more perception than reality.”
0 basis points change in vacancy
Vacancy: Nationwide self-storage vacancy remains at a historic low of
10.2 percent during 2017, due to continued household growth and rising
incomes.
+
2.7% increase in climate-controlled rents
Climate-Controlled Rents: Healthy underlying demand for storage
space continues to boost cost for rentals. The average rental rate for
climate-controlled space will rise 2.7 percent to $1.63 psf, building on a
1.6 percent increase in 2016.
+
3% increase in nonclimate-controlled rents
Nonclimate-Controlled Rents: Tight market conditions are driving
another year of steady rent growth in 2017. The average asking rent is
expected to climb 3 percent for nonclimate-controlled units to $1.31 psf.
— Elizabeth Braman, CCIM, Senior
Managing Director at Realty Mogul
Source: Marcus & Millichap
Senior Housing Equilibrium Projects Shortage by 2026
Supply (units, M)
Supply Trend (L)
80+ Population (M)
35
80+ Population (R)
Equilibrium (L)
3.0
2.5
28
Forecast
2.0
21
0
0.5 7
1.0 14
Source: National Investment Center for Seniors Housing and Care, U.S. Census Bureau, Q1 2017, from CBRE Research
6
September | October 2017
COMMERCIAL INVESTMENT REAL ESTATE
Supply Shortage
1.5