A total of 21% of Americans currently use self-storage, and another 15% plan on doing so, a study says.
People are using self-storage facilities more and more, thanks largely to the pandemic.
A total of 21% of Americans currently use self-storage, with another 15% saying they plan on doing so in the future, according to a study by Yardi’s StorageCafe, a storage-space marketplace.
“The storage market enjoys considerable momentum,” says Doug Ressler, business intelligence manager at Yardi Matrix, a real estate research firm. “The pandemic gave a huge boost to the trend for remote working.”
This trend means people need to create offices at home. And that means they need to clear out space and move some personal items into storage if they want to keep them.
Other Factors Boost Demand
“This only added to the traditional sources of demand” for storage space, Ressler said. Other factors include “the new trend in multifamily development that sees apartment sizes shrinking nationally,” he said.
In addition, “the shifting patterns in migration result in changing priorities about living arrangements, especially in places seeing a high inbound population flow,” he said. That too can lead people to opt for smaller living spaces.
“These factors and others may all encourage strong growth in the self-storage sector going forward,” Ressler said.
Among major cities, the strongest increases in interest for self-storage from 2019 to 2022 came in:
- Cleveland: 400%,
- St. Louis: 363%,
- Charlotte: 343%,
- Atlanta: 314%,
- Memphis: 298%
Interest was measured by Google searches and Yardi Matrix data.
Self-Storage REITs are on the Rise
This could mean good news for self-storage real estate investment trusts. The FTSE Nareit self-storage REIT index has returned 8.6% year to date. Its annualized returns are negative 20.3% for the last year, amid rising interest rates; positive 23.09% for the last three years; and 14.57% for the last five years.
Morningstar covers two self-storage REITs: Extra Space Storage (EXR) – Get Free Report and Public Storage (PSA) – Get Free Report. Morningstar analyst Suryansh Sharma assigns them both no moat, meaning they have no durable competitive advantages.
Extra Space Storage: He puts fair value for the stock at $177. It recently traded at $150.20.
Extra Space Storage recently agreed to acquire Life Storage, which will make it the largest self-storage operator in the country.
“The company’s strategy is to invest in enhancing the coverage, scale, brand, and operating efficiency of its self-storage facilities that are located within a three-to-five-mile radius of densely populated, high-income urban centers,” Sharma wrote in a commentary.
Extra Space has a third-party management business that also is the country’s largest, “enabling it to expand its footprint, data sophistication, and scale with little capital investment,” he said.
Public Storage: Sharma puts fair value for the stock at $326. It recently traded at $289.45.
Like Extra Space, “the company’s strategy is to own and operate self-storage facilities within a three-to-five mile radius of densely populated urban centers and invest aggressively in enhancing its coverage, scale, brand, operating efficiency, and technology platform,” he wrote.
“Self-storage … is considered a recession-resilient sector, as the demand for it is partially driven by transitions and difficult life events,” Sharma said.
“The industry has experienced tremendous growth in the last several years, and we see further societal shifts fueling that growth for years to come, albeit at a more modest pace,” Sharma said.
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