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 6-7 workers, and generates about $2 million annually.
- The self storage service industry consists of about 9,500 companies that employ 59,500 workers and generate $19.5 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, CubeSmart, and National Storage Affiliates.
Industry Forecast
Self Storage Services Industry Growth
Recent Developments
Sep 25, 2024 - Federal Reserve Cuts Interest Rates
- At its meeting in September, the Federal Reserve voted to reduce interest rates by half a percentage point, which would put the benchmark federal funds rate between 4.75% and 5%, according to The Wall Street Journal. Projections of fed officials’ moves suggest another four quarter-point cuts will come next year, which would bring the federal funds rate down to 3.5% by the end of 2025. However, it’s unclear to what extent September’s cut will affect housing demand. Mortgage applications were flat year-over-year in September. Meanwhile, for the week ending September 19, the average fixed-rate 30-year mortgage rate was 6.09%, down from 7.19% a year earlier, according to Freddie Mac. Even as mortgage rates have dropped, high home prices and other costs, including homeowner insurance, continue to weigh on affordability. Home sales are a key demand driver for self-storage services.
- The average metro rate for medium (10x10 & 10x15) climate-controlled self-storage units decreased by 4.5% year-over-year in August 2024, according to Yardi Matrix. Average metro rates for medium (10x10 & 10x15) non-climate-controlled units dropped 3.4% year-over-year. Average annualized same-store street rates – storage rent rates quoted to new customers – for non-climate-controlled units fell 3.8% in August compared to a year earlier, while street rates for climate-controlled units declined by 5.1%. Seasonal self-storage demand during the summer was weak, but some self-storage operators are hopeful that street rates have hit bottom and interest rate cuts will lead to better self-storage deal flow.
- Sales of existing US homes decreased by 2.5% in August from July and were down 4.2% year-over-year, according to the National Association of Realtors (NAR). Median existing home prices moderated from July’s all-time high, but August’s median home price rose 3.1% to $416,700 compared to August 2023. NAR chief economist Lawrence Yun said, “Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months.”
- The US’s four largest publicly traded self-storage real estate investment trusts (REITs) generally saw weaker demand in Q2 2024. CubeSmart’s same-store net operating income (NOI) fell 1.2% year over year in Q2 2024, and occupancy dropped to 91.5% from Q2 2023’s 91.9%. Extra Space Storage’s same-store NOI declined by 0.6% compared to Q2 2023; occupancy rose to 94.0% from 94.3%. Public Storage’s same-store NOI was off by 1.6%, and occupancy fell from 93.5% in Q1 2022 to 93%. National Storage Affiliates Trust’s NOI declined by 5.6%, and occupancy dropped 280 basis points to 87%.
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