State of the Industry: Four Self Storage Need-to-Knows Made Simple
Here’s the deal, over the last year there have been a lot of loud, noisy, headlines. We believe data tells stories, and helps marketers and investors make informed decisions. That’s why we dug up data from G5, the 2021 Self Storage Almanac, and the 2020 Self Storage Demand study to share relevant, timely, industry data.
Consolidation looks different to self storage operators of different sizes and experience levels. For new investors with limited experience in the self storage industry, REITs and third-party operators may add stability and appear appealing after the roller coaster called 2020.
From the self storage REITs perspective, they’re currently competing with an increasing volume and diversity of capital and investor interest, which is causing them to diversify some of their income streams. Third-party management platforms are also popular with the REITs for a number of reasons, including supplementing income, providing data for revenue management systems, and access to online leasing technology, all while filling the REIT acquisition pipeline with off-market properties of interest.
Want some sunny stats? Good. Wholly owned acquisition activity was robust and reached a volume of $467 million, across 41 properties in Q3 2020. Can we let you in on a secret? This approaches Q3 2019 levels.
One of the biggest headwinds for self storage is new supply, and oversaturation’s impact on lengthening lease-up times.
As many of the construction projects of 2020 were paused due to You Know What, new self storage properties are coming online all at once. In 2021, there are 1,900 self storage facilities planned and permitted in the United States, and 56% of those represent a top 50 metropolitan market. Compare this with the 466 that opened in 2020. This is a huge shift, and perhaps this is a shameless plug, but it’s relevant, we promise. If you want to skip the longer lease-up timelines, then work with a best-in-class MarTech provider to connect your properties with move-in ready renters.
#3. Cautionary Construction Tale
What’s something that the Little Mermaid and self storage have in common? Well, apart from needing storage for gadgets and gizmos a-plenty and whozits and whatzits galore, they both really feel the lyric “I want to be where the people are…” Now, contrast this with one thing we know about 2020? People. Moved. To. The. ‘Burbs.
56% of new self storage construction is in a top 50 metropolitan market.
As a result, urban properties in the construction pipeline may prove even slower to lease-up and stabilize. But, that doesn’t mean urban self storage properties are a bad idea. In total, there are more suburban self storage renters than urban renters, but there’s a higher percentage of households who rent self storage in cities and urban centers than the ‘burbs.
Read the report to learn how other real estate trends are impacting self storage construction financing.
#4. Property Tech + Online Leasing
Self storage properties turned toward tech to weather all things COVID. They doubled down on selecting tech options, including online leasing tools like G5 Uber Leasing® 3.0, and security-focused access control systems. Adding smart entry, online leasing, and other tech solutions translates into differentiation from local competitors and higher rents. If you’re bringing new properties online and are concerned about lease-up times, accelerate this by adding tech upfront to increase revenue.
These national trends are helpful to stick a pin in, and pay attention to, but what about city-specific trends? We dug into those for Chicago, Dallas/Fort Worth, Denver, Houston, Las Vegas, Los Angeles, Miami, Nashville, New York City, Philadelphia, Portland, Salt Lake City, and Seattle. Learn more by downloading the self storage State of the Industry Report, and exploring our city-specific data deep dives.