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 9,600 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 $1.4 million annually.

    • The self storage service industry consists of about 9,600 companies that employ 55,900 workers and generate $14 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, Life Storage (formerly Sovran Storage), and Cube Smart.
                                  Industry Forecast
                                  Self Storage Services Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Nov 21, 2022 - Asking Rents Rise, Occupancy Drops
                                  • Self-storage asking rents grew in the third quarter of 2022, but occupancy was flat, according to Cushman & Wakefield’s Self-Storage Performance Quarterly Review. Asking rents in Q2 2022 were up 1.5% over Q2 and rose 10.1% year over year. Median physical occupancy was in the third quarter compared to Q2 and decreased by 1% from Q3 2021. Industry experts expect self-storage demand growth to remain robust in 2023.
                                  • Several top US-based self-storage real estate investment trusts (REITs) notched strong income growth in the third quarter of 2022. CubeSmart’s same-store net operating income (NOI) grew 15.4% year over year in Q3 2022, and Extra Space Storage saw its same-store NOI rise by 16.4%. Life Storage’s same-store NOI increased by 18.4% in Q3, and Public Storage turned in same-store NOI growth of 17%. Christopher P. Marr, president and CEO of CubeSmart said, “We are in an outstanding position as our focus shifts to 2023. With another year of positive cash flow growth and a strong balance sheet, we’re well-positioned to perform in any economic climate and capitalize on all growth opportunities that present themselves.”
                                  • Automation is allowing self-storage facilities to improve the customer experience and reduce payment delinquency. The ability to sign leases and pay monthly rental fees online provides customers with convenience and has been proven to reduce the rate of late payments. Facilities are also automating access via mobile apps and digital keys that eliminate the need for physical keys, eliminate the need to rekey a lock if a tenant leaves and doesn’t turn in their keys, and allow owners to easily control access if an account becomes delinquent, according to Mini-Storage Messenger.
                                  • To control energy costs, self-storage firms are turning to solar panels. The flat or shallow-pitched rooftops of typical storage buildings are well-suited for solar panel installations. Firms may benefit from state and local government tax incentives and policies, such as net metering, which allows solar customers to send excess energy into the electrical grid and receive credit. Solar panel systems can now be financed via a power purchase agreement that allows the firm to pay for the equipment over 20-25 years and eliminates high upfront capital investment. Additionally, firms with solar panels can advertise as eco-friendly.
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