Extra Space Storage Inc. controls the highest-quality portfolio among the five publicly traded players in the self-storage industry, according to a new research report.
Shahzeb Zakaria, a REIT analyst at investment bank Macquarie Capital, graded the self-storage portfolios of Extra Space, CubeSmart, Public Storage Inc., U-Haul and Uncle Bob’s (Sovran Self Storage Inc.) based on eight factors tied to those companies’ geographic markets. Those factors are:
- Median income.
- Percentage of renter-occupied housing.
- Percentage of vacant housing.
- Housing prices.
- Number of local businesses.
- Number of nearby self-storage facilities.
- Distance to a competing facility.
After Extra Space, CubeSmart ranked second on Zakaria’s scorecard, followed by Public Storage, U-Haul and Uncle Bob’s. The analysis included facilities owned and operated by the companies, as well as those managed under third-party deals.
Zakaria stressed that Extra Space performed well in four categories that were weighted heavily in his scoring system: No. 1 for median income, No. 2 for population, No. 3 for competing facilities in a three-mile radius and No. 3 for distance to closest facility.
Here’s the top company in each of the scorecard’s eight categories, based on facilities in the companies’ U.S. markets:
1. Largest average population in a five-mile radius: Public Storage, 309,116.
2. Median income in a five-mile radius: Extra Space, $70,251.
3. Percentage of renter-occupied housing units in a five-mile radius: Public Storage, 38.6 percent.
4. Percentage of vacant housing units in a five-mile radius: Extra Space and Public Storage (tie), 9 percent.
5. One-year uptick in metro area home prices: Extra Space and Public Storage (tie), 6.4 percent.
6. Highest number of businesses in a five-mile radius: Public Storage, 8,314.
7. Lowest number of competing facilities in a three-mile radius: CubeSmart and Uncle Bob’s (tie), 10.7.
8. Longest distance to closest competing facility: CubeSmart, 0.87 miles.
For his analysis, Zakaria scored the five self-storage operators on overall supply and demand. Supply gauges the competition that a company’s facility faces from other facilities in a certain trade area, while demand measures the strength of demand from customers in that area. All eight factors went into computing the supply and demand scores.
CubeSmart came out on top in the supply category, followed by Uncle Bob’s, Extra Space, U-Haul and Public Storage. In the report, Zakaria wrote that CubeSmart grabbed the No. 1 spot, thanks largely to its big presence in the land-constrained New York City metro area.
On the demand side, Public Storage led the pack, followed by Extra Space, CubeSmart, U-Haul and Uncle Bob’s. Zakaria noted that although Public Storage “has the best portfolio from a demand perspective, the company faces greater competition than any other REIT on the supply side.”