SELF-STORAGE HISTORICAL TRENDS
#1CRE ASSET FOR THE LAST 28 YEARS
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INDEX
INTRODUCTION
Real estate investment has been a popular strategy for many savvy investors. It can be lucrative, but it doesn’t come without its pitfalls — the ups and downs of the housing market, fierce competition, and sometimes even nightmare tenants who can be more of a headache than they’re worth. But what if there was another option in the industry?
The self-storage industry has been around for a long time, but it has seen a recent increase among investors looking for a different niche in the commercial real estate market. Benefits of investing in self-storage include high-profit potential, regular income, relatively lower risk as compared to some other commercial real estate investments, and lower maintenance.
Inside Self-storage
Self-storage offers a wide variety of value-add opportunities as well as opportunities to build wealth. Currently, there are more value-add opportunities in self-storage than in most American multifamily properties — and the trend may continue for years to come. The same-property net operating income growth in these various commercial asset classes is shown below, with self-storage and manufactured housing leading the pack.
SUPERIOR RETURNS
According to the National Association of REIT (Real Estate Investment Trusts), the self-storage sector produced an average of 17.43% annual return from 1994 through 2017. For comparison, here are the returns from other REIT sectors over the same time period.
Factors That Contributed To
Self-storage's Growth And Popularity
Self-storage has emerged as one of the most popular commercial real estate assets over the past few decades. The industry’s growth has been driven by a range of factors that have made it an attractive investment opportunity for individual and institutional investors alike. In this section, we will explore some of the key factors that have contributed to self-storage’s growth and popularity.
CHANGING HOUSING TRENDS
One of the primary drivers of the self-storage industry’s growth has been the changing nature of the US housing market. The rise of home ownership rates in the latter half of the 20th century, accompanied by a corresponding increase in the number of renters, led to a demand for off-site storage solutions. This created an opportunity for the self-storage industry to fill the gap in the market by offering customers a place to store their excess belongings.
LOW BARRIER TO ENTRY
Another factor that has contributed to the self-storage industry’s popularity is its relatively low barrier to entry. Compared to other commercial real estate assets, such as office buildings or shopping centers, self-storage facilities tend to be less expensive to build and operate. This has made self-storage an attractive option for investors seeking to diversify their portfolios and mitigate risk during times of economic uncertainty.
CONVENIENCE AND FLEXIBILITY
The convenience and flexibility of self-storage facilities have also played a role in their popularity. Self-storage units come in a range of sizes, from small lockers to large warehouse-style spaces, allowing customers to rent only as much space as they need. Additionally, many self-storage facilities are open 24/7, allowing customers to access their stored items whenever they need to. This has made self-storage an attractive option for people in a variety of situations, from individuals moving homes to businesses looking for extra storage space.
TECHNOLOGICAL ADVANCEMENTS
Advancements in technology have also played a role in the growth of the self-storage industry. Many self-storage facilities now offer online reservations, automated billing, and remote access to storage units via smartphone apps. This has made it easier for customers to rent and manage their storage units and has helped self-storage operators streamline their operations and reduce costs.
E-COMMERCE AND ONLINE RETAIL
Finally, the rise of online retail and e-commerce has also contributed to the growth of the self-storage industry. As more people shop online and have goods delivered to their homes, the need for extra storage space has increased. This trend has been particularly pronounced in urban areas, where apartment and condo living often comes with limited storage options. In response, many self-storage facilities have begun offering specialized services, such as package delivery and pickup, to cater to this growing market.
The growth and popularity of the self-storage industry can be attributed to a range of factors, including changing housing trends, low barriers to entry, convenience and flexibility, technological advancements, and the rise of e-commerce and online retail. These factors have created an environment in which self-storage has become an attractive investment opportunity, and suggest that the industry will continue to be a significant player in the commercial real estate market for years to come.
WHY IS SELF-STORAGE A GREAT ADDITION TO INVESTMENT PORTFOLIOS?
AMONG THE FASTEST-GROWING REAL ESTATE SECTOR FOR 39 CONSECUTIVE YEARS
65% GROWTH IN THE U.S. SINCE 1995
1 IN 10 HOUSEHOLDS USES ONE OR MORE
93% OCCUPANCY NATIONWIDE; 100% IN HOT SPOTS
IT'S THE BABY BOOMERS...
SELF-STORAGE AS A COMMERCIAL REAL ESTATE INVESTMENT
According to the National Association of REIT the self-storage sector produced an average annual return of 17.43% from 1994 – 2017
MARKET OVERVIEW: SELF-STORAGE IS ON A GROWTH KICK
CHECK OUT CURRENT PASSIVE INVESTMENT OFFERING - STORAGE UNITS EQUITY INCOME FUND
12-18%
Avg. Annual
Returns
1.5x-2.0x
Targeted Equity Multiple
6%
Monthly
Cashflow
Income
Potential
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