The Self-Storage industry has been one of the fastest growing segments of the CRE over the last 30 years. It has outperformed other major CRE asset classes over the past 10 years, regardless of real estate market cycles and economic climates. Some Institutional Investors have been considered this asset-class as “recession proof” based on its performance since the recent economic recession.




The number of Americans utilizing Self-Storage has increased by nearly 50% in the past 20 years, a trend that is likely to continue.




First-generation facilities were unattractive single-story drive-up “rows” located far from any main street, residential or retail areas. Today, some of the most profitable self-storage facilities are located near to high-traffic, commercial and residential areas.




Demand




One of the fastest growing segment of the CRE industry over the last 30 years at 92% average nationwide occupancy.




Recession Proof




As people move out of their homes and downsize, the need for an extra place increase. The U.S. Population is predicted to reach 400 million by 2050 and in a cross-generational u-turn, people of all ages are returning in large numbers to the communities their parents left behind.




Less Drama




No Tenants. No leaking toilets. No broken AC units. No trash. 




Diversity




People from all walks of life use storage units. This might include doctors who store their archived files or small business owners who keep their inventory in a storage unit and run their business from home or small facility.




Maintenance and Repairs




Low cost of Maintenance. Usually, four walls and a roll-up door. No paint. No carpet. No mid-night calls




Evictions




If someone stops paying, you don’t have to evict or file foreclosure. You can typically put an “over lock” on the storage unit within a matter of days and an auction off the contents within 50-60 days.




Management




Minimum when compared to other real estate (like residential). Storage units are much easier to manage. 80% to 90% tenants don’t return to the unit until the day they move out, and it needs only one manager per 400 units vs two per 150 apartments.




Financing




Both, Commercial and Private Loans are available.




The Opportunity




The self-storage industry is highly fragmented with publicly traded self-storage companies comprise only 10% of the industry and the remaining 90% made up of private (small, medium-size) operators. Additionally, urban markets are rapidly adding high-density multifamily projects and increasing population which it leads to a huge demand for urban self-storage facilities. Yet, despite these demand drivers, a low supply of self-storage product exists in these markets leading to significantly higher storage rents and occupancies in urban markets. 




Key Drivers for Opportunity






	
Small, regional operators lack the resources and expertise to expedite the development process for urban infill self-storage product.


	
Large, publicly traded self-storage companies lack the agility to properly execute new urban development.


	
REITs looking for multi-property portfolios have pushed the market to a pricing premium with a historically low cap rate






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