The Economics of Self Storage

Self storage


Self storage yields excellent returns on investment. It is among the most profitable real estate businesses today. It’s extremely low declines and default rations, however, have proven resistant to recession. It is among the newest types of real estate business but the most unique. Because it is still a growing industry, it offers many opportunities for consolidation that lead to further portfolio growth. The most established of the companies in this industry have capitalized on the prevailing market conditions in their localities. They customize the sizes and security levels of custom units depending on the area with demand.


Here, we will explore the economics involved in this industry with consideration of self-storage units near me


Background


The self storage business is in general, about 60 years old. It has grown to a USD 22 billion industry hiring thousands of employees and supplying over 50,000 facilities in the United States today. The industry has further grown into an export business mostly to Europe. For the last 10 years, self-storage facilities have build hundreds of facilities in European countries and ferried thousands of goods across seas.


Currently, the market has gain significant improvement in the last 15 years. It has recorded over USD 1 million in equity money chasing yield in self storage. Both private and public multi-national companies have increased their investment and interest in this game.

There is a steady rise in investment. According to statistics, there was a 35% rise in investments between 2014 and 2017 in Europe. High returns evident over the past years have led to an increase of capital flow. The rise in both equity and debt prove that the industry is set to thrive in the future as a reliable real estate venture for investors.


Advantage of Investing in Self-storage


Renting space for very low and manageable prices in this industry make it an easier option than other real estate investments. The provision for temporal rent is another huge advantage of self-storage units.


National self-storage


National trends indicate that there is steady rise in self storage asset class. The total supply has doubled within the 15 year period ending in 2017. There is a compound growth rate of 5.3% every year. This translates to a national occupancy range of between 82% and 89% in American alone.


Studies show that the average monthly rental rates for standard 10X10 units rose from USD 83 in 2012to USD 120 in 2017. Research has found that supply for units doubled as vacancy retained a constant trend. It is easy to prove by observing the current trend of storage units near me. This translates into a resilient asset class.


Conclusion


In conclusion, all the underlying factors influencing the thriving of storage units prove it is a strong market. The impressive track record is also promising for future investment success. Self storage will always be a unique asset in real estate business. It has the investment characteristics of a asset class and hence a promising business.