www.REBusinessOnline.com September 2020 • Volume 16, Issue 7 SELF-STORAGE RESISTS RECESSION YET AGAIN By Taylor Williams Often heralded as recession-resistant, the self-storage sector in Texas is seeing steady occupancy rates despite a compressed lease-up season due to COVID-19. A Merriman Anderson recently designed this 1,117-unit self-storage facility for Utah-based REIT Extra Space Storage. New deliveries in major markets have been minimal in 2020, but sources say that is more attributable to overbuilding than COVID-19. s commercial property types go, self-storage is considered one of the toughest to sink in times of economic hardship. As Texas and the United States enter the eighth full month of the COVID-19 pandemic, this quality is beginning to show through. Natural disasters like floods and hur -ricanes tend to be windfalls for the as-set class, as displacement from homes and damage to commercial properties raise short-term demand for self-stor-age. A pandemic does not have quite the same effect on the property type, especially when residential landlords in the United States are legally barred from evicting tenants. But for the major self-storage mar-kets of Texas, COVID-19 has generated some positive results. COVID’s impact on self-storage is somewhat similar to Hurricane Harvey’s impact on the Houston multifamily market in 2017, which was also overbuilt and saw an overnight boost in occupancy as a re-sult of the storm cutting into supply. In essence, COVID-19 has served as a mechanism to bring supply-demand balances closer to equilibrium. Because prior to the pandemic, the development pipelines in the major cities of Texas were peaking, creating oversupplied SEE SELF-STORAGE page 19 CENTRAL TEXAS INVESTMENT MARKET HEATS UP Five key factors have continued to propel demand for select retail properties throughout the area during the pandemic. I By Brad Bailey, Adam Rabin and Logan Reichle of CBRE tify and secure strong retail real estate investments. There are a number of key reasons that these investors are honing in on Central Texas retail: • Suburban vs Downtown. Good retail locations are hard to come by in Austin. We estimate that investment demand will rebound for space recent-ly vacated. In high-quality locations, don’t expect too much of a change on rental rates. For some Austin submarkets like Cedar Park and Lakeway, we may see rates adjust slightly as vacancy rises. However, the suburbs may be the first to rebound with more em -ployees working from home. Down-SEE RETAIL page 22 t’s no secret that across the United States, the retail investment com-munity has had to shift and adapt in several ways due to the ongoing pan-demic. In addition, retail owners have had to make quick assessments of their strategies for asset management, usu-ally on a property-by-property basis. For the first part of the pandemic, the commercial real estate industry was primarily reactive and in crisis mode. However, seven months into it, the in-dication is that this is something that will be around for the foreseeable fu-ture. As such, investors are moving out of their reactive modes and beginning to implement offensive strategies to iden -CBRE recently arranged the sale of this net-leased retail building located at 316 Congress St. in downtown Austin. Unsurprisingly, capital sources are targeting deals with high-credit tenants and stable cash flows as much as possible during this time. INSIDE THIS ISSUE Who’s Hiring, Transferring and Retiring Across Commercial Real Estate in Texas? page 7 TREB’s Annual Economic Biggest September Deals, Projects in DFW, Houston, Austin and San Antonio Development Directory pages 8-11 pages 12-19
Texas Real Estate Business September 2020: Page 1
