Self-Storage Rates Dip Despite Expected Seasonal Strength

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Good morning. High interest rates continue to impact self-storage demand and performance well into 2025, according to Yardi Matrix's latest report. Plus, loan modifications hit $22B in the past year, with $9B in 2024 alone.

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SELF STORAGE

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• Running out of time: Loan modifications surged in 2024, with $22B modified in 12 months, and $9B in 2024 alone.

• Construction conundrum: A proposed bill in NY aims to expedite construction by allowing developers access to neighboring properties, but landlord rights are at stake.

• Prestige deception: Developer Michael Shvo faces a fraud lawsuit seeking $615M in damages for broken promises and substandard construction in exclusive club partnerships.

• REIT rebirth: REITs increased their May investments by $119.9M, signaling investor interest due to lower prices across property sectors.

• Up for grabs: The Fort Lauderdale Executive Airport hangar and office are up for sale due to the owner's $124M fraud judgments.

• Sky's the limit: The LA City Council approved Mitsui Fudosan's 50-story highrise at 754 S Hope St, with 580 units, shops, and parking.

• Bishop Ranch boom: Sunset and AvalonBay are about to build a 457-unit apartment complex in San Francisco’s Bishop Ranch business park, part of a $5B retail village redevelopment.

• Student oasis: Gilbane Development plans to build a 277-unit ASU student housing complex in Tempe, AZ, replacing the 186-room Moxy hotel.

• Innovative bond: The Bay Area Housing Finance Authority will issue a $20B bond for 70K–90K affordable units, benefiting 9 counties, focusing on low-income areas.

• Partnering up: Triten and TPG Angelo Gordon will invest up to $1B in IOS assets over 5 years, expanding on their existing JV, which has already acquired $500M in 16 markets.

• Tax troubles: Rising property taxes are squeezing industrial property owners and occupiers, with assessments up an eye-popping 29.6% and taxes increasing 21.3% on average.

• Chilling moves: Global Net Lease (GNL) sold a portfolio of cold storage properties for $170M, acquired for $153.4M, at a 7.88% cash cap rate.

• Buying time: West Hollywood developer Faring secures a $50M bridge loan to stabilize a 500KSF industrial property in Victorville.

• Retail revival: Miami's last Sears will soon become a mixed-use complex with 995 apartments and 55 townhouses by RK Centers.

• Upper West Side savior: Wegmans will open its 3rd NYC location at Broadway/West 65th, spanning 58KSF, boosting nearby luxury apartments and neighborhood retail.

• Home success: Kin Insurance subleased 20KSF in Chicago's Merchandise Mart from Avant, part of its growth as an 800-person remote workforce.

• Giant downsizing: Flexport, a digital freight giant, is seeking to sublease 75KSF in Atlanta after expanding its office space.

• Tenant shuffle: Lenders acquired a majority stake in a San Francisco office building as tenants like the City and County of SF plan to vacate.

• TikTok expands: The US arm of TikTok expanded its Bellevue, WA office by 195KSF to 280KSF at Lincoln Square North Tower.

• Smart strategies: Hotel investors remain optimistic, with 50% planning to up investments despite market challenges, focusing on value enhancement opportunities.

📈 CHART OF THE DAY