The Top Reasons for Self Storage Industry Growth
The self-storage industry has always been viewed as a recession-resistant industry. Price per square foot has more than doubled in most regions over the past five years despite the impact of COVID 19 and the economic downturn. Only two years ago, the cost of rentable square footage per capita topped off at six net (6x the amount of rent per square foot). Industry experts say the cost of rentable square feet per capita, as of today, rests somewhere between 12 to 13 net. The demand for self-storage has grown exponentially due to the COVID 19 pandemic that increased remote work and the skyrocketing price of homes. As the world is still adapting to its new standard, the self-storage industry will only continue to experience rapid growth.
Where other asset classes in real estate have slowed down or remained constant, none have exhibited the growth of the self-storage industry. In 2020, the global self-storage industry was valued at $48 billion. Today speculators see this number reaching $64 billion in the next three years. No other industry in history has exhibited such rapid growth, let alone in such a short time. The reason for the increase? A customer base that is stable and only growing makes self-storage a sound investment.
Pandemic-driven demand
Over the past two years, due to the pandemic, there has been a shift toward remote, flex, and hybrid work models. Businesses cannot maintain the rising cost of rent for physical office space, and many businesses are transitioning to virtual offices with remote employees. Companies of every size realize the benefits of this shift, while employees are purposefully looking for these jobs as they provide a better work-life balance.
Many people are looking for lower-cost living accommodations. This means transitioning to smaller homes for millennials and downsizing for baby boomers and empty nesters. Another reason for the shift is the rising costs of houses and apartment rental units. As the demand for smaller living quarters increases and people need to live with fewer personal belongings, they store them in self-storage units instead of donating, gifting, or selling their items.
Self Storage as a new investment asset class
As an investment asset class, self-storage has maintained steady growth during the Great Recession, COVID 19, and what economists call the Great Resignation. Where employees seek a better work-life balance for themselves and their families, they choose to resign from positions that don’t offer this type of flexibility. Many private investment groups are looking at self-storage facilities as an investment that offers steady growth and ROI. From 2009-2018, self-storage facilities have shown a steady increase, averaging 16.9%, higher than any other real estate investment class on the market. As long as investors are looking for solid, stable income, the growth of self-storage is unlikely to slow down any time soon.
The demand for self-storage is only growing. As we are dealing with the aftermath of the pandemic and its’ impact on everyday living, the need for self-storage will continue on an upward trend. At The Tymac Group, we understand the importance of building self-storage facilities that meet the demands of today’s world. Visit us at TheTymacGroup.com to learn how you can benefit from self-storage facilities today.
