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
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Feb 26, 2024 - Self-Storage New-Supply Growth to Slow
                                  • A surge in self-storage construction starts and the under-construction pipeline gave the industry a boost late in 2023. In February, Yardi Matrix upwardly revised its outlook for new self-storage supply, forecasting growth of 10.9% in 2024, and 12.5% for 2025. However, while project activity unexpectedly rose in the second half of 2023, street-rate growth for new rentals declined year-over-year in 2023, and a tighter financing environment increased the numbers of cancelled projects and deferrals. As a result, Yardi expects new-supply growth to soften to 2% of current stock (overall built square footage) in 2025 and 2026, then slow further to 1.5% of stock in 2028 and 2029.
                                  • US commercial real estate transactions were down sharply in 2023, but that hasn’t yet translated into significantly lower prices, according to The Wall Street Journal. In 2023, there were only $374 billion in commercial real estate deals, down 51% from 2022, according to MSCI. The value of 2023 deals was also 14% lower than in 2020, when many deals were scuttled because lockdowns prevented property viewings. Overall, US commercial real estate values have decreased about 11% compared to the highs seen in early 2022 when the Federal Reserve began raising rates, according to the RCA CPPI National All-Property Index. However, price drops have been mostly confined to particular property types, including offices in oversupplied business districts and apartments. Other property classes, including self-storage facilities, have seen fewer price drops.
                                  • Because the housing market is such a crucial segment of the US economy, its current weakness can be a drag on adjacent industries, including self-storage, according to The New York Times. Demand for self-storage spiked during the pandemic as people sought more space in their homes and bought new ones. However, high home prices and interest rates have since reduced home sales, and homeowners with a low mortgage rate are reluctant to sell. About 80% of homeowners with a mortgage have a rate under 5%, and a quarter of homeowners have a rate under 3%, according to Redfin. As self-storage demand has weakened, some financial analysts at major investment banks have issued warnings about the self-storage industry, according to The New York Times.
                                  • While high interest rates and economic uncertainty have revealed some pockets of weakness in the self-storage market, demand in the Sunbelt is expected to remain strong, according to Inside Self-Storage. Investments in self-storage have cooled since the pandemic when consumers put items in storage to make room for working and learning from home. However, the promise of an eventual drop in interest rates and a resulting decline in capitalization rates is expected to bring more investors into the market. Industry insiders note the Sunbelt is the key driver of demand amid strong population growth: of the 15 fastest-growing cities in the US, 12 are in the Sunbelt. Key growth markets include Florida, Georgia, North Carolina, South Carolina, Tennessee, and Texas.
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