The Self Storage Industry Is Booming – That’s Why It’s Quickly Becoming 2018’s Hottest Investment

 

You’ve probably seen them popping up in your town, and your neighboring town, and anywhere you travel to – the self storage industry is growing rapidly. Given the rationale behind the growth, it’s unlikely that the industry will show signs of slowing anytime soon.

As it stands presently, self storage is a $38 billion industry annually in the U.S. Over $2.27 billion was spent in 2017 in the first eight months alone on construction of self storage facilities. That is more than the entirety of 2016 where $1.9 billion was spent nationwide.

Why Is the Self Storage Industry Growing So Much?

The steady and impressive growth that the self storage industry has displayed over the last years has certainly piqued the interest of all types of investors. The growth has left many asking if the industry is sustainable as an investment.

In short, yes.

One of the largest contributing factors to the growth of the self storage industry is residential downsizing. This class of consumers is largely comprised of young families looking for a more affordable home and the Baby Boomer generation looking to downsize around their retirement.

Think about it like this: around 10,000 Baby Boomers turn 65 each day in the U.S. That’s a pretty large customer base. There are 325.7 million people in the U.S.1  The Self Storage Association notes that 1 in 10 people use self storage in their lifetime, giving investors ample opportunity to capitalize on.

Another significant contribution to the growth of the self storage industry is a focus on image that the industry has recently undergone. In years past, self storage was often thought of as storage rooms. Today the cosmetic appeal of many self storage facilities has shifted that perception.

Self storage facilities can be single-story or, if land prices are a concern, self storage facilities can be multi-story to make the most out of a smaller lot.

Many newer facilities are outfitted with curb appeal on the outside, with punch code security and cameras to build an additional layer of customer trust. Some new units even have retail space in their lower floors – creating potential for additional revenue.

Additionally, door and hallway systems make it easy to repurpose older, vacated buildings and bring new life to their communities.

Investors Aren’t Only Attracted to Self Storage Because of the High Demand – Self Storage Is a Sustainable Investment

The usefulness of self storage creates a high demand for facilities among consumers and investors are mindful of that. However, part of the attractiveness of investing in self storage lie in its resilience in times of market distress.

Consumers are in demand of self storage units whether the economy is an upturn or a downturn – a characteristic largely unique to self storage businesses.

When the economy is in a downturn, people downsize. Downsizing often commands the need for rental space to store belongings that can no longer fit in the home.

In times of economic upshift, consumers commonly purchase more items than they can keep in their home. Utilizing extra income, consumers are likely to rent a self storage unit to store their extra possessions.

Self storage is actually such a resilient and lucrative investment that many investors have no real estate experience at all turn a profit. The 2018 Self storage Almanac revealed that almost 75 percent of self storage facilities are owned by small operators.

Investors with experience in real estate rental prefer self storage over apartment rentals due to the simplicity of managing the space. No toilets to break, and no live-in renters to deal with.

Why Not Invest in Self Storage?

Self storage can be largely passive income. These facilities are affordable, require little in terms of operation, are in high-demand, and are flexible for almost any investor’s needs. You don’t even need any prior real estate experience to take advantage of the lucrative opportunity that self storage investment offers.

1. United States Census BureauWorld Bank