self-storage investing

The Perfect Storm – Self Storage Investing

Self-storage is a very interesting industry.  It is one of the few that has remained immune to economic downturns. Not many industries out there have a track record of such stability, particularly within real estate.

The History of the Self-Storage Industry

This industry came into being in the US post-World War II period. Since then, it has grown astronomically and with no signs of slowing down. As of 2014, there are 51,475 self-storage facilities in the U.S. alone. That’s about 2.63 billion square feet of self-storage in our nation! So do we need more self-storage facilities?

Yes!

 

Consumers continue to find themselves constrained by the space inside their homes and must utilize self-storage facilities.  This continued demand will likely result in growth in this property market after expansion in 2014-2015, according to real estate brokerage firm Marcus & Millichap in its National Self-Storage Research Report.

“To date, the robust performance of self-storage properties is primarily driven by growing space demand,” states the report. “After hunkering down during the recession, U.S. consumers are clearly back in an accumulation phase, buying new things that will inevitably relegate older possessions to self-storage spaces around the country.” …. from RealtyMogul.com Education Center

Graph representing growth of top REIT self storage facilities

Self-storage may not be the most attractive sector in real estate, but it has caught the attention of Wall Street. The four publicly traded self-storage real estate investment trusts (REITs) have been turning in impressive results reporting higher occupancy and higher rates with an increase in revenue.

Despite the growth and expansion rate of the 4 top REITs, the industry is still primarily dominated by Mom & Pop business owners personally managing and working in their businesses.  Many have found that their income producing business has increased in value beyond what was expected.  They are ready to sell to capitalize on this opportunity.  This provides a fertile field for investing opportunities by individual investors looking for income producing businesses that can be proven to be increasing in value with high market demand. This is not a get-rich-quick scheme as it could take years for a return on investment.  In the meantime, investors benefit from monthly income plus if utilizing 3rd-party management companies, income without preforming office duty.

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