Self-Storage facilities offer numerous benefits over many other types of CRE investments
As different asset classes within commercial real estate rise and fall during these uncertain times, it’s good to see one that’s long-lived and doing well. Self-storage properties are currently thriving and there are indications this niche has a bright future.
A long history
It’s hardly a new concept. People in ancient China were storing personal items thousands of years ago. In the 1800s, Martin Bekins set up storage facilities to hold the possessions of people immigrating to the United States while they were looking for permanent places to live. Nearer to our time, a storage company opened up for business in Fort Lauderdale, FL, back in 1958 — a possible precursor of the modern storage phenomenon.
Today, it’s a booming U.S. industry that generates nearly $40 billion in annual revenue. More than 10 percent of households rent these facilities. The total square footage is so great that if spread out evenly across the population, each person in the country would have more than six square feet of space.
Weathering recessions and pandemics
Many people are drawn to this investment because of its ROI potential and its tendency to remain strong during a recession — always a selling point for a commercial real estate asset.
The industry also showed itself resilient during the COVID-19 pandemic. In fact, there are several pandemic-related factors that may actually have helped the industry grow in Florida. Many people moving here from other states have needed a place to store their possessions while seeking permanent housing (a challenging exercise in a state with such high occupancy). Others have downsized and moved into apartments. These renters have started using self-storage to hold the overflow they once kept in their larger houses.
That’s not all. With offices closing in the wake of the pandemic’s remote-work effect, business owners may find their equipment too bulky and prolific for storage at the home office — another unexpected opportunity for the self-storage industry.
An attractive investment
One of the benefits of this asset class is that constructing them requires less regulatory red tape and expense than many of the others, for example, multi-family residential, office and retail.
In terms of investing, self-storage can have a robust profile. This is true whether we’re talking about big players who own several facilities or people investing in self-storage REITs. Analysts expect these investments to experience some of the best growth rates of any property sector in 2021.
Another more intangible benefit is that some of the nicest, most interesting people make up the self-storage community. That’s true within SVN, where we have a national team focused on that segment. These are people willing to help each other, share information, and come together. It’s just incredible.
So, when you’re looking for commercial real estate investments, don’t overlook this growing niche. The team at SVN Coastal Commercial Advisors will be happy to help locate a property that’s right for you.