Mom and Pop Shops Still Dominate the Self Storage Industry

Posted on Mar 18 2013 - 8:46pm by Holly Robinson

In many respects corporations have taken over the business landscape steadily pushing out the little Mom and Pop shops. However, there are still some industries like the self storage industry that are still largely dominated by the little guys.

Over the last few years one of the best investments in real estate has been a surprise to most—the self storage industry. At one time considered a blight on the landscape of the community, the industry has transformed into a vibrant member of society, both social and business.  

Recent years have seen commercial investors become enamored with the industry buying up independent self storage facilities all over the country. In fact, over the last two years the self storage industry has been rated a top performer of any real estate investment trust (REIT) by the National Association of Real Estate Investment Trusts for the last two years.

On practically any given day if you type in “self storage” into a search engine several stories will appear within the first couple pages about one of the top five REITs buying one or more independent self storage facilities. 

However, in spite of the activity that REITs have had in recent years the independent Mom and Pop self storage facilities still dominate the industry landscape.

“This is one commercial sector that is still dominated by smaller investors. Because these investors usually only sell if necessary, they are often motivated and will offer attractive pricing and terms. They have also been known to work off market, preferring to work through private groups rather than going public with the sale,” said Terry Robinson, President of Genesis Capital and the Off Market Association.

Currently there are over 50,000 self storage facilities in the United States. Of those, the top five REITs own approximately 5,100 of those facilities or roughly ten percent of the industry. There are a number of smaller companies that own anywhere from three to 100 facilities. It has been estimated that lose to 80 percent of the industry are small investors—or the Mom and Pop businesses.

Whether that percentage will change drastically in the coming years remains to be seen. With construction of new facilities still not ramping up very much facilities are enjoying high occupancy rates making them profitable and desirable to hold onto.  At the same time, thanks to the health of the industry independent operators can get top dollar if they do sell.

Sources Used:

“Off Market Association Examines Self Storage Investments Today: Small Spaces, Larger Returns.” PRWeb; 18 March 2013.

2012 SSA Fact Sheet; Self Storage Association.