Economists have long called the self-storage industry “recession resistant,” and with good reason: very few commercial real estate investments are as low-risk as self-storage buildings. In fact, while the events of the past few years have resulted in fewer people buying homes and general consumer goods, the self-storage industry has actually thrived during this time, with REJournals reporting that the industry anticipates an annual growth rate of 5.45% between 2021 and 2026.
Why is it that self-storage thrives even during economic downturns, and why does the self-storage industry present a low-risk investment opportunity for entrepreneurs and commercial real estate investors? Here are just a few reasons.
1. When the economy is strong, consumers make more purchases
In strong economies, consumers tend to have more money to burn. This often results in them making large purchases, such as boats, RVs or ATVs. Once they make these pricy investments, buyers need a safe place to store and protect them, driving up demand for self-storage space.
2. When the economy is weak, consumers have to downsize
While strong economies drive up the need for storage space, so, too, do weak economies. When homeowners or renters face tight budgets, they become more likely to downsize to smaller living spaces. When they do, they often need places to house goods that do not fit in these smaller homes, leading to increased demand for storage units.
3. When people work from home, it helps drive demand for self-storage
The growing popularity of remote work is also driving up demand for self-storage. When more employees start working from home, businesses start questioning how much commercial or office space they truly need. To save money, some start transitioning to completely remote work environments, and when they do so, they often need places to store files, office furniture and other valuable business assets.
4. When people move, they need storage units
Moving is a top reason many people rent self-storage space, and people tend to move in strong economies as well as weak ones. Many consumers choose to place their belongings in storage units while transitioning between homes or while renting a home while looking for one to buy.
5. When storage space is necessary, consumers will travel
While many consumers want storage units that are within a reasonable distance from their homes and offices, research shows that they are also willing to travel to the closest available facility when they need self-storage space, regardless of how far that facility may be.
You have options when you invest in commercial real estate, and some of those options involve far less risk than others. If you are on the hunt for a low-risk investment opportunity that offers a significant return, regardless of the state of the economy, consider investing in self-storage. Request a quote from us today!