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
Mar 27, 2024 - Self-Storage Industry Growth Moderates
- The self-storage industry’s sales are expected to soften over the next several years after substantial gains in the years during the pandemic. The industry’s year-over-year sales rose 2.1% in 2020, 17.7% in 2021, and 14.9% in 2022 before moderating to 6.8% growth in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales are projected to rise a modest 3.7% in 2024, then see average annual growth of about 4.8% through 2027, according to Inforum and the Interindustry Economic Research Fund, Inc.
- 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%.
- The average metro rate for medium (10×10 & 10x15) climate-controlled self-storage units decreased 3.5% year over year in February 2024, according to Yardi Matrix. Average metro rates for medium (10×10 & 10x15) non-climate-controlled units dropped 2.9% year-over-year. Average annualized same-store street rates – storage rent rates quoted to new customers – fell 3.6% in February compared to a year earlier. Yardi doesn’t expect market conditions to improve for the spring leasing season. However, lower interest rates later in the year or in early 2025 would improve the housing market and stimulate migration, which would help drive demand for self-storage.
- 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.
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