228. What Cooling Inflation means for Self Storage
Self Storage Income
AJ Osborne
4.9 • 591 Ratings
🗓️ 16 January 2024
⏱️ 39 minutes
🧾️ Download transcript
Summary
The Fed chair Jerome Powell decided to stop interest rate hikes. It's in the news, it's what's trending - but is it accurate? If so, what are the effects on storage?
The potential rate drop creates a weird dichotomy. Despite wanting GDP to drop, and for unemployment to rise, the Fed changing its tune is surprising. Recessions are the most effective way to stop inflation...when it works. It's also an election year: historically, the Fed has only changed rates once before an election. It threatens the politics involved, and they want to step back.
If they're going to do something, they have to make a decision quickly.
In self storage, this affects more than just the price of a storage unit. This can hit maintenance costs, building/renovations, staffing costs, advertising, and much more.
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Transcript
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| 0:00.0 | Welcome everybody to self-storage income. |
| 0:07.0 | And we are like 2023 to 2024. |
| 0:13.0 | What a year 2023 was. |
| 0:16.0 | And the Fed dominated, really, really dominated the whole, well, everything, but especially the narrative and the market itself. |
| 0:28.9 | And we're going to talk about the Fed today because the market has rejoiced as the Fed changed its narrative. |
| 0:40.0 | Now, we want to be very clear on what it means because I think there's a lot of almost misunderstanding. |
| 0:50.0 | I think a lot of people, when I hear people talking about what the Fed said that they're doing, |
| 0:55.2 | the Fed never said what most people think. And it's an interesting thing that happens. |
| 1:02.1 | But so I think, first of all, we can dive straight into that because we need to talk about |
| 1:07.9 | what this action means for storage and what it means for our industry, |
| 1:14.1 | how it affects it, and how you should be thinking about it, both in the terms of the asset |
| 1:20.6 | itself, meaning the buying and trading and selling of the storage facilities, the investment |
| 1:26.3 | asset, but then the operating and the customers, the demand of the storage facilities, the investment asset, but then the operating and the customers, |
| 1:30.2 | the demand of the asset. And these are two pretty big different, these are two different sides, |
| 1:36.4 | but they are both 100% affected as we saw in 2023 with the Fed's decision and rising interest rates. |
| 1:44.8 | No, I'm really excited to dive into it. |
| 1:47.3 | I mean, obviously, the Fed, like you said, really did kind of change their tone, right? |
| 1:51.1 | Powell's out there talking about higher, higher, higher, and then suddenly it's like, |
| 1:54.9 | we're not going to do anything, and we're actually going to plan on lowering it, was it three times in 2024? |
| 2:18.5 | Well, and that's the funny thing is he actually never said that. Yeah. And that's, but like everybody thinks he said that we're going to drop rates. Three times. Three times. Everything else. And he never said that. He never even said he was going to lower rates. Interesting because that's what I've been hearing. Yes. That's what everybody's been talking about and hearing. And he actually stated, he actually stated, and it's not that it wasn't significant, |
| 2:24.4 | but what happened was when we had a, there were reporters asking him questions. And there was one |
| 2:32.9 | question that they asked him. And basically, he more laid out a plan or an idea that the question that was asked was if |
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