Even before the pandemic forced many home and business owners to downsize, the self-storage industry saw steady growth year after year. The New York Times notes that the industry grew an average of 3.5% every year for the past 30, and the fact that recent events have only heightened demand for self-storage space has many investors and entrepreneurs taking notice.
Long dubbed “recession resistant” within the commercial real estate sector, demand for self-storage often increases during challenging economic times. Here are some of the reasons self-storage is a low-risk, high-reward investment opportunity for today’s business owners and entrepreneurs.
National occupancy rates exceed 90%
At the national level, the average occupancy rate at a self-storage facility exceeds 90%. Yet, most self-storage business owners only need to have about 60% of their units occupied to turn a profit.
Boat & RV sales are booming
RV and boat sales surged during the pandemic, and owners of these assets now need places to house and protect their valuable investments. This has led to a surge in demand for larger units with wider doors and higher ceilings. It has also caused an uptick in the number of existing and new self-storage business owners looking to add larger storage units to their properties.
Self-storage customers are loyal
Generally speaking, self-storage customers are a loyal bunch. While some people rent storage units on a temporary basis, others are what industry insiders call “sticky.” “Sticky” refers to renters who tend to rent long-term and are unlikely to vacate their units, even when prices go up.
So, are self-storage buildings still profitable? Given the recent uptick in RV and boat owners, the fact that the self-storage industry thrives even during times of economic uncertainty, and that fact that occupancy rates – and rents – are at record highs, the answer to this question is a resounding yes.
