Demand for Self Storage Continues to Grow

Posted on Apr 28 2014 - 11:47pm by Kim Kilpatrick

With the economy performing well according to Wall Street you might think that the self storage industry may not be as needed as before. When it was failing people were forced to downsize and needed somewhere to store their belongings while they tried to get back on their feet. Now that the economy is back and growing will that still be the case?

Will people still need self storage?

Whether they are using it because they are downsizing or just have a lot of stuff it appears that the answer to the question is yes. According to a report by Marcus & Millichap on the self storage industry’s performance so far in 2014 the industry’s performance continues to improve. 

For example, in St. Louis thanks to a growth in the population and employment the percent of vacant units in the area is supposed to decrease by 50 basis points to 13.3 percent. A similar improvement is expected in Minneapolis where the percentage of vacant units is expected to decrease to 12.3 percent.

The self storage industry is expected to see improved results in other cities as well according to the study. Vacancy in Detroit self storage facilities is expected to drop to 14.5 percent by the end of the year.

As vacancy drops the industry will become a more desired investment than it already is. According to reports in the media there are new facilities being constructed, existing structures being converted, and facilities being bought and sold all the time.

Chris Ross, the owner of Synergy Self Storage in Merrimack, New Hampshire understands the rising demand hence opening his new facility recently.

“We believe we fill the niche of an unmet need,” said Ross, “that of a secure storage location for temperature and humidity sensitive items, such as furniture, collectible items and paper-based products….”

With the industry projected to continue to do well in the coming year serious investors are doing what they can to increase their portfolios. However, as more try to do so the competition drives up the asking price.

“The strength and volume of offers received on this asset is a testament to the wide range of investors interested in stabilized facilities like Apollo,” says Luke Elliott, an investment specialist for Marcus & Millichap.

Elliot recently brokered a deal for a self storage facility in Apollo Beach, Florida—Apollo Beach Mini Storage for $2.15 million.

Sources Used: 

“Marcus & Millichap reports: People still stowing plenty of stuff at self-storage units.” REJournals; 28 April 2014.

“New self-storage facility opens in Merrimack.” The Cabinet; 24 April 2014.

“Why Self-Storage Could Be the Next Big Hit.” Globest; 24 April 2014.