Self Storage: Mini-storage property sales remain elusive in Oklahoma

By Darren Currin for The Journal Record

When the recent recession hit the nation full force, many experts hailed mini-storage facilities as one of the most recession-proof property types. In fact, some believed that mini-storage properties would actually benefit from the recession. Their thinking was that with more people having to downsize their life due to the downturn in the economy, there would be an increase need for storage. This is very logical thinking especially considering how the sharp uptick in foreclosures displaced many Americans forcing them into smaller rental properties.

Even though the effects of the recession were not as pronounced in Oklahoma City and Tulsa, the impact was strong enough for this trend to be seen in the Sooner State. Over the past couple of years, occupancies have steadily increased in local mini-storage facilities. Some have seen such growth in new customers that available units are scarce, especially in quality properties that have been well-maintained.

Despite the growth in mini-storage market fundamentals, sales of these properties have been very slow over the past two years. In 2010, statistics show that only three properties sold in the Oklahoma City metro area and only one in Tulsa. The story was much the same in 2009 as only one mini-storage property sold in Oklahoma City and two sold in Tulsa. The remaining three properties sold in smaller rural areas of the state in 2009.

So why have sales been so slow despite the strength in occupancies and rents? There are two answers to this question. The first answer is that the mini-storage market was not immune to the issues seen in the lending sector. Investors had difficulties securing financing even for well-performing properties like those found in the mini-storage market. The second answer is that the increased occupancies and rates resulted in steady net operating incomes for owners giving them little motivation to sell. Since it was difficult for investors to secure credit, owners have seemed content to sit back and enjoy the steady income being produced by their properties.

Now that credit is thawing, don’t be surprised if Oklahoma City and Tulsa begin to see more mini-storage properties change hands in 2011 and 2012. Demand is strong for mini-storage properties by investors because of their stability. This demand should help perk up the interest of owners in selling their properties in the coming months.


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