Looking Back at the Self Storage Industry

Investing in Self Storage

In the last decade, the most profitable and sure-fire real estate investment was not grand office buildings or trendy restaurants or luxury resorts – it was simply just self storage.

Self storage continues to grow year over year mainly because of two things. First, Americans move a lot. There are only a handful of families that live out their whole lives in the same neighborhood. People change jobs multiple times over their lifetimes and almost all of those require living in a different place.

Second, as time goes by, people just keep on getting more and more stuff. With their hard-earned money, it’s difficult to throw away old things before buying more possessions. As a result, basements, attics and even garages get filled up with unused things and families clamor for more space.

Between 2001 and 2011, storage facilities earned an increasing 3% net operating income yearly, a significant sustained growth in an otherwise harsh real estate industry. This translated to twice the cash flow growth of other property types. Also, storage facilities have doubled in this time to over 58,000 all over the US. The total rentable space is now over 2.3 billion sq.ft.

Though families and individuals still make up the greater majority of self storage renters, businesses have started to turn to storage facilities as low cost options for their inventory.

Small and local business owners continue to control 84 percent of the self storage market. The big public companies on the other hand do buy up more mom-and-pop facilities but only control 16 percent. It’s still very much an entrepreneur’s field, with about 75 percent of local owners having only that one primary storage facility.

Where the self storage industry goes from here in the next decade is unknown, but it certainly looks bright and promising.

Recent Posts