As someone considering opening a business in the self-storage sector, you may have already heard that the industry is “recession resistant,” or unlikely to suffer when the economy takes a dive. Historically, the self-storage industry has proven to be the most reliable part of the commercial real estate sector, and all signs point to demand for self-storage units not only remaining high, but rising, in 2023.
Why do economists predict strong demand for self-storage units in the year to come? Several of the factors expected to impact demand for self-storage in 2023 are as follows.
Per CNBC, economists anticipate that national rental rates will rise between 5% and 7% between June of 2022 and May of 2023. Mortgage rates will likely also remain high well into next year, making it difficult for many people, and in particular, first-time homebuyers, to come up with enough money to buy a home. With high mortgage and rental rates forcing many people to downsize, those same people find themselves in need of new places to store their belongings that won’t fit in their homes.
While the worst of the COVID-19 pandemic may be over, many companies have updated their business models in the time since. Many employees have also started working from home, leading businesses to question how much commercial office space they actually need. A growing number of business owners have decided to cut costs by eliminating office space, but many of them also have valuable business assets they need to store somewhere else – increasing demand for self-storage.
As the Baby Boomer generation continues to age out of the workforce, many members of this population are finding themselves grappling with rising rent and housing costs – and fixed incomes. As the national cost of living rises, so, too, does the number of Baby Boomers who are finding themselves priced out of larger homes and forced into smaller residences – thereby driving self-storage demand.
As the U.S. economy continues to recover from pandemic-era challenges, a growing number of shipping and transportation companies are utilizing storage units, as opposed to their own rental facilities, to drop off or reload cargo. As more businesses make this money-saving shift, the need for storage units to house their cargo will increase.
The national occupancy rate of self-storge units hovers above 90%, and economists and strategists expect it to remain steady in 2023. As housing costs climb, pandemic-related shifts and shipping woes continue, and Baby Boomers continue to age, the demand for self-storage will climb alongside them – leading to significant returns for those who invest in the industry.