Earlier this week, Public Storage acquired Simply Self Storage from Blackstone Real Estate Income Trust for $2.2B, marking the latest deal in an industry that is quickly consolidating. In April, we examined ExtraSpace Storage’s $12.7B acquisition of Life Storage, which at the time, made ExtraSpace the largest player in the self-storage space. With this week’s proposed acquisition, Public Storage will acquire 127 properties and 9 million net rentable square feet across 18 states, and move Public Storage back to the top of the list of self-storage REITs in the nation.
The consolidation activity in the self-storage category is not coincidental. The category is a highly fragmented category with many regional and local operators. According to ExtraSpace Storage’s March 2023 Company Presentation, the largest five players (including the combined ExtraSpace and Life Storage) represented just 35% of total self-storage square footage in 2022, with another 45% coming from non-REIT institutional quality properties. Demand for self-storage facilities surged during and coming out of the pandemic due to increased migration trends and living space downsizing trends. According to our data, average visitation trends to self-storage chain locations has continued to grow in 2023.
Public Storage's acquisition of Simply Self Storage is a play on migration trends, as the merger press release pointed out that “approximately 65% of the properties are located in high-growth Sunbelt markets” and that Simply Self Storage’s properties are “located in markets with population growth that has been approximately double the national average since 2018”. We’ll likely see additional acquisitions in the space in the coming years, with Sunbelt markets looking like increasingly fertile grounds for potential acquirers.