In 2020, it’s practically impossible to drive through any town or city without seeing a few storage facilities. The self-storage market has boomed over the past decade, and more locations pop up every day. In fact, the industry has grown by an average of 7.7 percent each year since 2012. Why the storage boom? A variety of factors come into play. Baby boomers reaching retirement are choosing to downsize but need someplace to store their lifetime of memories and valued possessions. Urbanization has seen Americans and citizens of the world leaving the suburbs and heading back into the cities, where they have less living space. An increasing number of small businesses find it more economical to keep inventory in storage facilities rather than renting additional retail space. Despite an undeniable building spree over the past few years, the United States is still nearing its storage capacity: more than 90 percent of available self-storage space is already in use. Operators are now looking to differentiate themselves from the competition, and a variety of self-storage technology trends have emerged as a result. Interested in learning more about the self-storage industry? Read on for 18 facts you probably didn’t know about the storage facility market:
Industry SnapshotThere’s no question that the self-storage industry opens a pathway to profits for investors, owners and operators.
- The U.S. self-storage industry’s 2019 annual revenue was valued at $39.5 billion, according to IBISWorld’s Storage and Warehouse Leasing Industry Report.
- In 2018, the number of self-storage facilities in the United States ranged between 45,547 reported in the 2019 Self-Storage Almanac, and 60,024 reported by IBISWorld in 2020. The totals vary based on the definition and methodology used by the source, but the average exceeds the total of all Starbucks, McDonald’s, Dunkin’ Donuts, Pizza Hut and Wendy’s locations combined.
- 1 in 11 Americans uses self storage and pays an average of $91.14 to rent space
- Storage operators enjoy a 41-percent profit margin, compared to the 22-percent average profit margin across all industries.
- In 2018, the area of rentable self-storage space in the United States exceeded 1.7 billion square feet across more than 45,000 facilities, owned by more than 39,000 operators. According to the Statistic Brain Research Institute, the area is enough for every American to stand under the rooftops of self-storage facilities at the same time.
- Self-storage renters most commonly locate facilities online. According to the 2019 Self Storage Almanac, in 2017 the internet surpassed driving by as the most-used channel for new tenant acquisition.
Industry ExpansionThe storage industry is expanding at rates practically unseen in other markets.
- Annual revenue for the self-storage industry has increased drastically in the past decade, with 2019 revenue 49.4-percent higher than 2010 revenue, according to IBISWorld. Mordor Intelligence predicts the self-storage market will exceed $115 billion by 2025. The boom makes the self-storage industry one of the fastest-growing sectors of the U.S. economy.
- In 2017, 9.4 percent of U.S. households rented a storage unit for an average of 14 months.
- The total self-storage space added in the United States increased from 18.5 million additional square feet in 2015 to an extra 36 million square feet in 2017.
- According to the U.S. Census Bureau, storage facility construction costs in 2018 reached $4.99 billion, a 27-percent increase over the prior year. Incredibly, the construction costs were 344-percent higher than they were in 2007 and 444-percent higher than 1997.
- In 2018, more than 23 million individual storage units were available to rent in the United States – or one for every 14 people in the entire U.S. population. Even given the influx of new construction, the U.S. self-storage occupancy rate in 2018 exceeded 91 percent, a boost from 75 percent in 2010.
Market SaturationDespite increased demand, a construction boom soon could outpace it.
- According to Forbes, the demand for self-storage will continue to increase, but new supply will soon outpace it thanks to the flurry of new construction. Industry analysts predict this will cause a decline in the high returns enjoyed by some of the biggest industry players, which could in turn lead to lower rental prices as operators compete for new business.
- While a construction boom has allowed the storage facility supply to keep up with increased demand, Neighbor.com founder Colton Gardner forecasts that demand will soon be outpaced in the short term by new inventory.
- Increased restrictions might result in increased rental prices if demand continues to increase and the additional supply is hindered. Municipalities around the United States are placing a cap on self-storage growth. For example, New York enacted a zoning freeze in 2019, so it takes two years to obtain permission to build new facilities. City officials cited lack of space and displacement of businesses that would use the space to create more jobs.
Self-storage in America and BeyondThe storage industry expansion has impacted worldwide markets that share common factors.
- The largest self-storage market might be in North America, but the fastest-growing is the Asia-Pacific market, according to Mordor Intelligence.
- The increased demand for self-storage facilities is at least partly due to the increasing rate of urbanization around the world. As people move to living spaces in cities, they typically have less space for all their possessions. Downsizing to smaller homes in any location also plays a large role in the storage market.
- An aging population, increased population density and improving economic conditions all factor into the self-storage market’s fast growth in the Asia-Pacific region.
- Revenues for the storage industry are expected to decline for the remainder of 2020, as economic activity has been reduced by the COVID-19 pandemic. While IBISWorld expects profit margins to fall, they still will remain high.
- As more people use self-storage to keep their valuables safe, an increased demand for climate-controlled facilities. Consumers should understand the difference between climate control, which moderates both temperature and humidity, and basic temperature control. Motili’s integrated services can provide preventative and reactive HVAC systems management and energy control for storage operators.