Since the pandemic began, the best real estate bet was that Americans would have to keep their extra belongings.

Self-storage stocks have been big winners since last year’s economic lockdown, overtaking e-commerce warehouses, malls, and e-commerce Rental houses.

Investors dumped self-storage stocks when the pandemic broke out without knowing that business was going on Rent lockers threatened to boom. Americans were clearing bedrooms and garages for home offices and gyms. Others packed up their apartments and made their way to COVID-19 huts or home from campus. Companies feared shortages rented space to store inventory. Availability dwindled and rents skyrocketed.

US economic growth revised to 2.3% in the third quarter, but still lagged

Since February 21, 2020, shortly before the pandemic markets, self-storage stocks in the FTSE Nareit All Equity REITs Index have achieved more than 85% returns between price gains and dividend payments. This compares with a return of around 18% compared to the broader real estate investment trust index, which tracks the performance of 153 companies that own high-yield real estate, from cell phone towers to Woodland.

Industrial real estate, Data centers and McMansions also exceeded during the pandemic. But not nearly as much as self-storage.

Additional storage space Inc. shares are twice as valuable as they were at the start of the pandemic, and Public storage Share returned 73%. The S&P 500 Index, which includes the shares of both companies, achieved a total return of around 41% during this period.

Market leadership is a familiar position for these storage providers. Public storage pioneered the self-storage business, and when its bright orange signs became ubiquitous, its market value rose to more than $ 64 billion. A $ 1,000 investment in Extra Space stock in 2009, in the depths of the housing crisis, would be worth more than $ 60,000 today, including dividends.

Self-storage thrives in good times and bad. Marriage and household education are good for business. Likewise divorces.

Investors large and small flocked to the warehouse, and by 2019 a flood of new units threatened to exceed the speed with which Americans amassed excess belongings. According to Green Street, a real estate investment research firm that has an estimated 1 in 10 Americans using storage units, another 5% of the land was added nationwide in 2018 and 2019, and 3.8% came out in 2020.

The pandemic helped fill the new space. The four largest storage companies each reported record utilization of over 95% in the third quarter. Extra space and public storage, with about 345 million square feet of space in between, were almost 97% occupied.

The average monthly storage bill in the US hit $ 155.65 in November, the highest in five years on credit and debit card data researched by analysts at KeyBanc Capital Markets. Rents are not rising as much as this summer, but they are higher in November – according to real estate data in many places by more than 10% year-on-year for an area of ​​3 x 10 feet by Yardi Matrix. Hottest Warehousing Markets Are The Same As Homes: Florida, Texas, Phoenix and Atlanta.

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Analysts at JPMorgan, Raymond James and Truist Securities recently revised their earnings forecasts for storage companies and raised target prices for the stocks. “Despite robust rate growth for new and existing customers, we hear of little change in customer behavior,” wrote Raymond James’ Jonathan Hughes to customers.

For many, paying an ever-increasing monthly bill is easier than figuring out what to do with grandma’s old dinnerware. Non-paying property is auctioned on online sites such as storagetreasures.com and Lockerfox.com. The big firms suspended auctions at the start of the pandemic, but they are again making room for non-payments.

Land and Building Investment Management LLC, a hedge fund that invests in real estate stocks, owns $ 41 million in public storage. “We have decided that self storage is a great place in an inflationary environment,” said founder and chief investment officer Jonathan Litt.

The company says self-storage is a good inflation hedge because the operating costs are low compared to real estate like hotels, which require more staff and maintenance. Monthly leases offer more rental options than properties with multi-year contracts such as shopping malls and offices.

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Rising construction costs have sparked a scramble over existing storage facilities. Green Street analysts do not expect supply growth to return to 2020 rate until 2025. Especially large publicly traded companies Life preservation Inc. and CubeSmart, have topped up with acquisitions. Big investors also buy.

KKR & Co. has spent more than $ 300 million on storage facilities in the past few months and has set up a company to operate it and add more. Roger Morales, who leads KKR’s commercial real estate acquisitions in the Americas, said the company is counting on increasing demand from companies keeping inventory just in case, as well as people looking to larger homes from rising homes Prices and apartment rents have become too expensive, but they need more space.

This article first appeared in the Wall Street Journal