US self-storage occupancy, rental growth slip in Q4'22; NY asset sells for $266M

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The self-storage real estate sector in the US saw a slowdown in occupancy and rental growth in the fourth quarter of 2022, Cushman & Wakefield said in a report.

Average occupancy declined in the fourth quarter of 2022 to about 90% from its peak of 93% in the first quarter of 2021 as the home sales market declined and a new supply of self-storage space came online.

Softening net demand pushed down the national average rent to $130 per unit in the fourth quarter of 2022, a decline of approximately 3% from $134 per unit in the previous quarter.

The commercial real estate services firm forecasts favorable long-term results for the self-storage sector on the back of secular demand trends.

"[P]opulation growth, increased divorce rates, migration and work patterns will continue to drive demand and produce favorable returns to investors," Cushman said in the report.

CHART OF THE WEEK: US REITs' same-store net operating income improves in 2022

⮞ US equity real estate investment trusts recorded a 6.1% median growth in same-store net operating income (NOI) in 2022, coming from a 5.3% growth the previous year, according to an analysis made by S&P Global Market Intelligence.

⮞ Industry same-store NOI in the fourth quarter of 2022 had a 5.7% median growth year over year, from a median gain of 5.0% in the third quarter and 5.1% in the second quarter.

⮞ Self-storage REITs posted the biggest gains in same-store NOI in the last three months of 2022 with 13.3% year-over-year median growth.

Property transactions

– Medical Properties Trust Inc. agreed to divest its Australian real estate investments operated by Healthscope, also known as the Healthscope portfolio, to affiliates of HMC Capital Ltd., including HealthCo Healthcare and Wellness REIT.

– DRA Advisors LLC purchased a 2.8 million-square-foot portfolio of last-mile and logistics infill industrial assets, featuring 54 buildings, and an 84.5-acre outdoor storage space located around metro Chicago, New Jersey, Long Island, NY, and Philadelphia for $369 million, according to Commercial Property Executive. DRA Advisors entered into an investment partnership with Venture One to acquire the portfolio.

– The Chetrit Organization sold a 21-story office property at 850 Third Ave. in New York City to private investment firm HPS Investment Partners LLC for $266 million, The Real Deal reported, citing PincusCo.

– InterRent Real Estate Investment Trust acquired a 605-suite, two-tower apartment community at 2 and 4 Hanover Road in Brampton, Ontario, for a total of C$185.5 million. The Canadian multifamily REIT purchased the community in a joint venture with Crestpoint Real Estate Investments Ltd. and Vestcor Inc., in which InterRent has an initial equity interest of 10%.

– Empire Capital Holdings is under contract to buy a 20-story building at 529 Fifth Ave., New York City, from Silverstein Properties Inc. for $105 million, according to the Commercial Observer.

CorEnergy suspends, 7 other US REITs slash dividends