Downsizing baby boomers and small business are contributing to the self-storage surge in American. These facts should help jump-start a business story on facilities in your community.
10 quick facts about self-storage
1. According to market research company IBISWorld, annual revenue in the U.S. self-storage industry is now $33 billion, having grown 50 percent in just six years. The industry is expected the to continue growing at an annual rate of 4.7 percent, compared with average projected GDP growth of 2.1 percent, according to IBISWorld.
2. Self-storage brings relatively few jobs to the surrounding community: an average of 2.46 employees per establishment in 2012 according to the U.S. Census Bureau. That number decreased by 8.2 percent from 2007. According to Forbes, it’s one reason the facilities are unpopular in many communities. Others are unappealing aesthetics and low property taxes.
3. Self-storage proves to be a safe, recession-resistant investment. In 2008, the self-storage industry showed the only positive total annual returns among a number of property sectors including industrial, retail and residential. An analysis from the industry trade group, NAREIT, showed the other sectors suffered losses as high as 60 percent.
4. According to Forbes, one of the main drivers of the self-storage surge is the baby-boom generation. Representing 24 percent of the U.S. population according to the U.S Census Bureau, the group is fast-approaching retirement, downsizing to smaller housing and moving to the Sun Belt. But not, apparently, willing to get rid of grandma’s rocking chair. Another key segment: small businesses looking for a cheap way to house inventory.
5. Based on Self Storage Facility Growth data, more than two self-storage facilities were constructed every day in the United States since the industry was born 60 years ago. The pace of long-term growth beats that of McDonald’s.
6. The average monthly rental price for a 10-by-10-storage unit is $128 nationwide; around $162 if the unit is climate-controlled. The numbers have increased steadily for six consecutive years. The rate growth is expected to continue next year, according to National Real Estate Investor.
7. The United States makes up almost 90 percent of the global self-storage market according to Storedge.
8.. According to Forbes, a self-storage facility requires only a 45 percent occupancy rate to break even, far below other types of real estate.
9. Self-storage businesses are mostly privately owned, with the top 10 U.S. companies controlling only 16 percent of the total market. However, recent years reveal a strong consolidation trend. NSAT, a Maryland-based real estate investment trust (REIT) specializing in self-storage, bought 25 self-storage facilities for $199 million in the second quarter of 2016.
10. The Wall Street Journal reported that large investment firms are becoming increasingly interested in the self-storage industry, with the Carlyle Group spending $80 million to help build new facilities.
Reporter’s Takeaway
• While the self-storage industry has boomed over the last six years, positive employment impact on local communities is minor. The number of employees per facility has decreased since 2007, contributing to the unpopularity of the businesses.
• Traditionally privately owned, self-storage facilities have recently become attractive to REITs, with large financial investments.
• It’s worth looking at self-storage facilities in your community for figures on employment, compliance with local zoning codes and impact on property values.
