Self Storage: Real Estate Expert Predicts Self Storage Will Bounce Back First

Self Storage: Real Estate Expert Predicts Self Storage Will Bounce Back First

by Tony Gonzales for

Grubb & Ellis AGA US Realty Fund manager Jay Leupp predicted last week that self storage real estate will bounce back before most of the rest of the real estate market, probably within a year or two.

“We see commercial real estate in the early stages of a three- to five- year recovery,” Leupp told an interviewer from last Wednesday’s Fund Manager Five Spot feature, a regular feature featured by The Street in which prominent investment fund managers recommend stock picks in answers to five quick questions. “The sector recoveries will be at different paces though. We see apartments, health care real estate and some of the specialty areas, like self-storage, recovering very soon, over the next 12 to 24 months.”

Leupp’s predictions about the future of self storage match what he was saying two years ago, when he told a Fox Business reporter that the recession would only increase the demand for self storage. At that time, he said that the demand for self storage would increase as people downsize their homes or move back home in response to economic stress. “That couch you had at your own place might not fit at Mom and Dad’s,” he commented in 2008.

Leupp also predicted that other real estate areas would take longer to recover. He predicted that suburban office space, for example, would take four to five years to recover from the market’s drop. Leupp further predicted that apartments and health care real estate, like self storage, will do well over the next year or two. Overall, he expected industrial and retail real estate to recover in 18 to 36 months. “Things aren’t quite as bad in commercial real estate as a lot of the press has put out over the period of time,” Leupp told CNBC earlier this month.

Looking ahead to opportunities to invest in real estate, Leupp noted elsewhere (in SmartBrief, March 24) that Grubb & Ellis hopes to use its $24 billion in public market equity to begin acquiring, or developing, real estate assets. REITs, he felt, were well positioned to take advantage of the changing commercial real estate market over the next several months.

Sources used:

Greenberg, Gregg. “Apartment, Health REITs to Rebound First.” The Street. March 24, 2010.

“Grubb & Ellis manager predicts self-storage recovery in 12-24 months.” Inside Self-Storage. March 25, 2010.

“Leupp: REITs are well ahead of the private sector.” SmartBrief. March 24, 2010.

Park, JeeYeon. “Commercial real estate rebound is beginning: portfolio managers.” CNBC. March 11, 2010.


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