NORTHEAST SNAPSHOT, FEBRUARY 2009
Buffalo Self-Storage Market
In Upstate New York, words such as “stable” and “equilibrium” are still being heard when it comes to the area’s commercial real estate industry — a rare feat in today’s climate.
“We are rather insulated from the sub-prime mess that was going on in other markets that were ‘hot markets,’ if you will, because our lending practices are much more conservative, and we didn’t have to be as aggressive as many of the lenders had to be in some of those other markets,” says Nick Malagisi, managing director of Buffalo, New York-based Sperry Van Ness/Commercial Realty and national director of the company’s self-storage practice.
When this stability is combined with the self-storage industry’s necessity right now, it makes for a sector suffering far less than others. Self-storage has actually been able to benefit from the current climate, as people downsizing from larger houses to smaller rental properties need extra space to put possessions. Some reports are even indicating that self-storage is the strongest commercial real estate sector right now.
That being said, activity in the Buffalo area has been quiet — mostly due to the lending freeze. The last significant self-storage portfolio to go to market was two years ago and new construction has also seen a decline. According to Malagisi, people are holding onto their properties right now, unless they have a reason to sell. He adds that once banks start lending, though, new construction will start up again.
“It’s a steady market right now,” Malagisi says. “There is still discounting going on for new business. There will be very little new development, but supply and demand are in equilibrium right now.”
Self-storage is not completely immune to the times, though, so many are still keeping their fingers crossed that the upcoming year shows an improvement.
“We remain cautiously optimistic for 2009,” Malagisi says.
— Coleman Wood
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