Speaking to a panel of real estate professionals in the 1980s on the dangers of overbuilding during a period of economic expansion, Dallas real estate magnate Trammell Crow offered lenders in the crowd a simple proposition: “If you stop lending, I’ll stop developing.” Thirty-one years later, the nature of that relationship has manifested in the Texas self-storage market. After minimal delivery of self-storage properties in 2012 and 2013, development began to surge in 2014. The Texas Self Storage Association (TSSA) estimates that there are now roughly 6,500 facilities statewide, and local sources concur that unit growth from 2014 to the present has been somewhere in the neighborhood of 350 new facilities per year. This development boom has occurred in the face of rising land prices, high property taxes and a constricting pool of skilled labor that has driven up construction costs. Overall economic growth is contributing to the concern as well. Lenders are still lending, thus developers are still developing, betting that the pent-up demand for self-storage properties in Texas still has some gas left in the tank. The bullish perspective on self-storage appears to go beyond the Lone Star State. Tennessee-based hotel data and research firm STR, which has …
