THE SELF STORAGE INDUSTRY
The self-storage industry in the United States generated more than $24 billion in annual U.S. revenues (2014 - estimate). The industry has been the fastest growing segment of the commercial real estate industry over the last 40 years and has been considered by Wall Street analysts to be “recession resistant” based on its performance during up and down cycles.
Self-storage has evolved into one of the primary commercial real estate products. It is the top performing property sector in the NAREIT index. For the 10-year period 2005-2014, self-storage reported the highest returns of any of the seven primary REIT sectors at 18.15%. For the 21-year period 1994-2014, self-storage reported the highest returns of any of the seven primary REIT sectors at 18.20%. During Q-1 2015, self-storage was again the top performer at 9.16%.
There are two main reasons why the self-storage industry keeps growing. The American public is mobile. Gone are the days when people live their entire life in the neighborhood where they grew up. It is estimated that today’s young work force will change careers five to seven times during their lifetime – and many of those job changes require moving to a different location. Another reason why the self- storage industry keeps growing is that people keep acquiring possessions. Their basements, garages, and attics are filled to overflowing and people find that they still need more space. Life events also drive the need for self-storage. That need translates into renting a storage unit.
Since 2001, the number of storage facilities has doubled to over 58,000. Total rentable space in the United States is now over 2.3 billion square feet. During that same time, the average number of units per facility grew from 243 units to 566 units per facility. The industry has seen a shift in its tenant profile. Individuals and families remain the primary renters of self-storage. However, entrepreneurs and businesses are increasingly turning to using self-storage facilities as a low cost option for things such as storing inventory or doing business out of the rental unit. It took the industry over 25 years to build one billion square feet. However, it took only 8 years (1998 to 2005) to build its second billion square feet of rentable space. The future for the self-storage industry is bright.