Self Storage Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 9,500 self storage service providers in the US rent or lease secure space, such as rooms, compartments, lockers, containers, or outdoor space, for clients to store and retrieve goods. Storage properties include one story buildings, multi-story buildings, climate controlled units, and parking areas for boats and motor vehicles. Sources of revenue include rent, sales of storage items (boxes, packing materials), insurance, late fees, administrative charges, and truck rentals. Large companies may offer management services.
Demand Dependent On Local Demographics
Because the majority of demand for self storage comes from customers within a one to three mile radius, a company’s business health is related to local population demographics and density.
Oversaturation Drives Down Occupancy
Some markets suffer from excess supply due to oversaturation.
Industry size & Structure
The average self storage company operates a single location, employs 5-6 workers, and generates about $1.7 million annually.
- The self storage service industry consists of about 9,500 companies that employ 58,600 workers and generate $16.8 billion annually.
- The industry is fragmented; the top 50 firms account for about 60% of total revenue.
- Just over half of self storage facilities are located in suburban areas; about 36% in urban; and 12% in rural.
- About 10% of US households and 12% of US businesses rent self storage units.
- Large companies include Public Storage, Extra Space Storage, Cube Smart, and National Storage Affiliates.
Industry Forecast
Self Storage Services Industry Growth
Recent Developments
Apr 26, 2024 - Self-Storage Industry Growth Moderates
- The self-storage industry’s sales are expected to soften over the next several years after substantial gains during the pandemic. The industry’s year-over-year sales rose 16.1% in 2022 before moderating to 5.9% growth in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales are projected to rise a modest 3.8% in 2024 and 4.7% in 2025, then see average annual growth of about 4.6% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
- After a demand surge during the pandemic, the self-storage industry is experiencing a slowdown as demand wanes and operating costs rise, according to The New York Times. The COVID-19 health crisis unleashed a wave of self-storage demand as people fled cities to less-crowded suburban areas. New self-storage development boomed, resulting in oversupply in key growth markets like the Sun Belt. Meanwhile, fewer people are moving as high interest rates have chilled the US housing market. Rising supplies and falling demand have led to lower street rates – prices quoted to new customers. In March 2024, the average monthly rent for storage in the US was $85.14, down from $108.58 two years earlier, according to SpareFoot, an online self-storage search platform. As pricing has fallen, self-storage operators’ costs - including property taxes, insurance, and refinancing - are rising.
- The average metro rate for medium (10×10 & 10x15) climate-controlled self-storage units decreased by 4.4% year-over-year in March 2024, according to Yardi Matrix. Average metro rates for medium (10×10 & 10x15) non-climate-controlled units dropped 3.8% year-over-year. Average annualized same-store street rates – storage rent rates quoted to new customers – fell 4.2% in March compared to a year earlier. Yardi Matrix said major self-storage real estate investment trusts (REITs) are competing for customers by reducing street rates while trying to make up the difference by increasing the rents of existing customers more frequently. Smaller players are following the same game plan but have been slower to do so as they lack the pricing power of their deep-pocketed competitors.
- The top US-based self-storage real estate investment trusts (REITs) saw mixed income growth in Q4 2023, and they experienced slight drops in occupancy. CubeSmart’s same-store net operating income (NOI) grew 1.2% year over year in Q4 2023, although occupancy fell to 90.8% from Q4 2022’s 93.3%. Extra Space Storage’s same-store NOI declined by 0.1%; occupancy dropped to 93% from 94.2%. Public Storage’s same-store NOI fell 0.5%, and occupancy dropped from 93.4% in Q4 2022 to 92.7%. National Storage Affiliates Trust’s NOI declined 1.6%, and occupancy fell 3.6%. In CubeSmart’s Q4 and full-year 2023 report, CFO Tim Martin spoke to the company’s 2024 outlook, “Given the volatility in storage fundamentals coupled with the uncertain macroeconomic backdrop, our initial 2024 guidance contemplates a wide range of potential outcomes.” CubeSmart expects its full-year 2024 NOI growth will fall in the range between -4% and 0%.
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