Self-Storage: Where It’s Been and Where It’s Going

When you hear about self-storage, you’ll likely think of two things: the self-storage facility that you pass each day commuting to and from work and A&E’s Storage Wars. The latter is arguably the most common follow-up question/topic I get when people learn that I work in the industry. However, that has changed quite a bit in recent years as self-storage is increasingly becoming a strategic real estate investment that is hard to ignore. 

The truth is, self-storage has become a household name in the past few years, not only on TV and to the general American public, but to Wall Street and private investors throughout the United States and abroad. This boom in demand for self-storage ownership has erupted the transactional volume—with facilities being sold for record prices and in record time. As such, we’ve also seen a development boom over the past few years, with investors trying to ride the storage wave and enjoy the wonderful profits that self-storage has historically delivered time and time again.

While it’s an extremely profitable industry, success doesn’t come easily or without hard work. It’s become increasingly competitive as more individuals become aware of the opportunities that self-storage provides. Navigating this new landscape in the industry can be challenging, to say the least. With the entrance of a plethora of new capital and new competition comes a very sophisticated market with highly educated investors and big firms going head-to-head with single owner-operators throughout the United States. This competitive environment and massive demand for self-storage creates an optimal sellers’ market, one that can be extremely profitable with the right help. 

Of course, self-storage isn’t specific to the United States – it’s a global industry.  However, many of the Asian nations that I meet with at self-storage conventions are eager to invest in the United States. The reason? While countries such as China have to worry about issues such as unsanctioned government shutdowns of their businesses, the United States is seen as a guiding light and stability for investment, even through the most recent COVID-19 crisis that paralyzed the world. The United States is also seen as the forefront leader in self-storage, giving us an additional leg up in the attractiveness of the investment.

With fifty-plus years of multiple real estate and economic cycles, presidents, debt crises, wars—you name it—the US self-storage industry has stood strong through it all. In fact, it truly has flourished through sour cycles, as uncertainty breeds demand for self-storage. Even the three Ds (death, divorce, downsize) in regard to storage all reflect times of uncertainty. But times of uncertainty don’t have to be negative by any means. It could also mean you have job options all over the country, your kid is deciding between various major universities, you’re thinking about buying the second house, or maybe your husband is about to buy yet another car he doesn’t need to work on—all of this drives demand for space in one capacity or another.

The Future Consumers of Self-Storage 

One topic that isn’t covered as well as you’d think in industry conferences worldwide is the future of self-storage and what it looks like. While the self-storage industry may have taken form with previous generations, Millennials are poised to take this industry to new heights in terms of demand and transformation. 

In 2016, I took the stage at the SSA Fall Conference and Trade Show in Las Vegas, Nevada, with Ms. Natalie Bragg to discuss the millennial generation and why we are so good for the storage industry moving forward. At the time, we felt it was a very necessary presentation, as our generation was coming under scrutiny for being lazy, narcissistic, and entitled. What we were able to share through the presentation, though, was not only why we’re the best generation to employ in America but why we are also the demand drivers for storage for our age group (which older generations did not anticipate).

At the time of our presentation, the average millennial changes jobs five times before they are twenty-five. We go back to school numerous times for multiple degrees, we move to Southeast Asia for six months to backpack and “find ourselves,” and most importantly, we’re on a four-year lag compared to prior generations.

There are a number of reasons why the millennial generation is putting off traditional concepts of commitment. Many grew up around a very toxic and tumultuous time with the world financial crisis being smack-dab in the middle of their developmental years. As an extension of this many millennials experienced stressed familial relationships and the collapse of familiar institutions, leading to increased uncertainty. 

As millennials surpass the baby boomers as the largest generation, the leading consumers of self-storage are emerging. As parents are retiring and trimming down their lifestyles, they are passing down their goods, and while millennials are not eager to take on every item, there’s a desire to hold onto them due to sentimental value. The solution? Self-storage. This generation has also embraced the urban lifestyle, which often requires additional storage space for items. Self-storage is not going anywhere.  

Even as the world shifts and evolves into a landscape completely different from that of our parents, the need for self-storage has only increased.  Opportunities for innovation and creativity abound as a new generation of consumers and investors take over.  Learn more about self-storage investment and brokerage by checking out my book, The Sexy Side of Self Storage.