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, Cube Smart, and National Storage Affiliates.
Industry Forecast
Self Storage Services Industry Growth
Recent Developments
Jun 28, 2024 - Existing Home Sales Drop
- Sales of existing US homes decreased by 0.7% in May from April and were also down 2.8% year-over-year, according to the National Association of Realtors (NAR). The median price for all types of homes in May was $419,000, marking an all-time high and up 5.8% from a year earlier. According to Freddie Mac, as of June 20, 2024, the 30-year fixed-rate mortgage averaged 6.87%, down from 6.95% for the same period in 2023. NAR chief economist Lawrence Yun said, "Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers. The mortgage payment for a typical home today is more than double that of homes purchased before 2020. Still, first-time buyers in the market understand the long-term benefits of owning." Home sales are a strong demand driver for self-storage services.
- High home prices and elevated interest rates have made it more difficult for people in starter homes to trade up for more space, according to The New York Times. More than 60% of current homeowners have a mortgage rate that’s 4% or less, according to Freddie Mac. Many homeowners who purchased their house when interest rates were at historic lows now cannot trade up because it would mean taking on a new mortgage with a much higher interest rate. Homeowners’ unwillingness – or inability – to leave a low rate for a higher one has reduced the inventory of homes for sale, which is contributing to housing inflation. In 2023, there were about 900,000 fewer home sales than in a typical year, according to the Federal Housing Finance Agency.
- The average metro rate for medium (10×10 & 10x15) climate-controlled self-storage units decreased by 4.3% year-over-year in May 2024, according to Yardi Matrix. Average metro rates for medium (10×10 & 10x15) non-climate-controlled units dropped 3.7% year-over-year. Average annualized same-store street rates – storage rent rates quoted to new customers – fell 4.5% in May compared to a year earlier. While a soft housing market has reduced self-storage demand, some operators are optimistic that rent increases for existing customers will help offset street-rate weakness and that demand – and street rates - will improve amid the summer moving season.
- The top US-based self-storage real estate investment trusts (REITs) had weaker income growth in Q1 2024 but experienced steady occupancy. CubeSmart’s same-store net operating income (NOI) fell 1.9% year over year in Q1 2024, and occupancy declined slightly to 90.4% from Q1 2023’s 91.9%. Extra Space Storage’s same-store NOI decreased 0.5%; occupancy rose to 93.2% from 92.7%. Public Storage’s same-store NOI fell 1.5%, and occupancy declined from 92.9% in Q1 2024 to 92.1%. National Storage Affiliates Trust’s (NSAT) NOI decreased by 3.7%, and occupancy fell by 3.8%. In NSAT’s first-quarter 2024 report, president and CEO David Cramer said, “Our team performed well in what remains a challenging operating environment characterized by continued pressure on street rates and significant competition to attract new customers. Rental volume and occupancy are increasing from the seasonal trough in February, but the next few months will be key determinants of full-year performance.”
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