Multi-Story Self-Storage: A Lucrative Real Estate Investment Opportunity

 

Self-storage is a relatively new industry that is rapidly changing. It has evolved from single-story storage units to temperature and humidity-controlled facilities. Climate-controlled storage maintains optimal temperatures to reduce humidity, which helps to prevent moisture that can lead to destructive mold and mildew growth on belongings. Investing in climate-controlled spaces is profitable because customers will pay premium rates to keep belongings protected.

An emerging trend is multi-story, multi-use buildings with two or more stories of storage, equipped with elevators that make moving belongings easier.  These configurations have made self-storage a lucrative opportunity for commercial investors, entrepreneurs, the architects that design them, and anyone looking for the opportunity to achieve a healthy return on investment.

To better illustrate why it’s a good investment opportunity, the market for self-storage is mainly residential areas that are typically within 3-5 miles of a facility. People utilizing the service appreciate convenience. The population density found in cities makes multi-story self-storage a great fit for urban environments.

Self-Storage in Landlocked Areas

Because many urban areas are becoming landlocked – with land availability becoming scarce, real estate prices are rising. Even in rural areas with homes being built on smaller lots, there is little room for sheds and garages. The inability to store belongings on the property calls for the self-storage facility closest to home. For most, it’s faster and more convenient to rent self-storage space than it is to invest in a personal storage building that may have to be built or delivered at an initial cost that is greater than one year of self-storage rental fees.

The Potential of Self-Storage Investing

According to Media Group Online Inc., yearly self-storage revenue is now up to $22 billion each year. This translates into $1.42 per square foot, and most facilities have an 87.4 percent occupancy rate. However, less than 9 percent of households in the U.S. are renting self-storage units. Considering the current revenues and the potential for growth, there is limitless potential. Investing in multi-story self-storage produces a better return on investment (ROI) than many other types of commercial real estate investments.

One reason why investing in self-storage produces a superior ROI is because other commercial markets are saturated. For example, it might be difficult to establish a restaurant in a specific area because there might already be a strong restaurant market. Self-storage, however, is experiencing burgeoning growth, and construction of new facilities continues on an upward trajectory.

Another reason why self-storage produces better ROI is that, once stabilized, self-storage facilities generally offer good recession resistance compared to other commercial real estate.

Investing in Multi-Story Self-Storage

With self-storage growing by leaps and bounds, it presents many opportunities for architects, private equity firms, investment groups, the general contractors that build them, and entrepreneurs looking to make an investment with a high probability of turning a profit. Multiple people with interests in this industry are given the opportunity to make money at different phases of the process. It’s the investor that has the opportunity to receive returns over the long term.

Multi-story self-storage is in the early stages of ascendant growth offering one of the best investment vehicles in the commercial real estate world.