Self-storage centers in demand in Florida

"What I didn't expect was for the real estate market to turn downward," Sherri e-mailed me. "(It) left me with five properties, some cash flowing and some negative equity which I can't sell."

This is a similar predicament for many investors who bought rental homes in Southwest Florida and other booming markets when home prices were increasing by double digits. Sherri was a full-time insurance saleswoman for 10 years. But buying rental houses seemed like a more lucrative pursuit. She even got a real estate license to learn more about the industry.

Now that her investments have soured, Sherri is looking for other real estate types that may be doing better than rental homes. She believes that self-storage may be the answer.

"At this point, I am having to regroup so I can figure out how to make my goal of owning storage facilities a reality," she says.

She asked me how to research the self-storage market and learn if that product type represents a lucrative alternative for her investment strategies.

The housing market has tanked, office vacancies are increasing, retail tenants are cutting back on their expansion plans and almost every real estate product type is in retreat. Yet the self-storage industry seems to be relatively unscathed in most markets.

According to a March article in the "Mini Storage Messenger," R. Christian Sonne, managing director of Cushman & Wakefeld's self-storage industry group, says that the demand in Florida for self-storage centers generally exceeds the supply. But each site has to be researched separately. For example, the article says that Tampa is at equilibrium, with an indication of undersupply in some neighborhoods.

In many cases self-storage users are households that are downsizing. Some rent storage because they are victims of foreclosed homes and need to temporarily store their furniture and household belongings. Military personnel on overseas missions are also major users of storage centers.

As with any industry, trade associations collect data, sponsor educational events and provide networking opportunities for their members. According to the Self Storage Association, almost 10 percent of all households rent self-storage units.

Most trade associations are listed in the Encyclopedia of Associations. The several volumes are available in the research section of most libraries. Another information resource is the Securities and Exchange Commission. Public companies are required to disclose financial information to the SEC and they even discuss their target markets and strategies.

In Sherri's situation, she can check out 10K and 10Q filings of Real Estate Investment Trusts such as Public Storage, Extra Space, Sovran and U-Store-It for self-storage industry data.

She can access their SEC filings online at www.sec.gov/edgar.shtml.