The Self-Storage Industry has Been Remarkably Resilient During the Pandemic
Self-storage has been affected like all businesses during the COVID-19 pandemic. However, the state of the self-storage industry during COVID-19 has been far more promising. In fact, you might even say the industry has been resilient to COVID-19.
Recently, Bill Gates partnered with StorageMart, the 8th largest self-storage company in the world, as an investor. There must be some value to it then, after all. According to Mordor Intelligence Research, the valuation of the industry was $87.65 billion in 2019.
Why is the Self-Storage Industry Doing Well?
Self-storage has been driven to success by a lot of things including increased urbanization, downsizing, and lifestyle changes. While all these things have been accelerated during the COVID-19 pandemic, it hasn’t slowed down self-storage. The industry actually plays a role in people’s lives during difficult transitions.
Self-storage has been historically resistant to recessions as well. That’s during COVID-19 self-storage industry delinquency rates have been less impacted than others. A study of 1700 loans for self-storage facilities have been less affected than those for real estate, like hotels.
However, the main reason that self-storage is doing so well, is because people need space to store their belongings. During recessions, many businesses run the risk of failing, or huge losses. People stand to lose their homes. Hence, their need spaces to store whatever is valuable. Plus, it’s pretty easy to protect your storage space from viruses.
It is a Booming Industry
The US Census Bureau reports a 584% increase in construction spending for the self-storage industry, from January 2015 to January 2020. Annual revenue for the self-storage industry in 2019 was nearly 50% higher than in 2010. As per predictions, the market will appreciate to a value of $115 billion by 2025. That will make self-storage one of the fastest growing sectors of the US economy.
During COVID-19 Self-Storage Industry Value Has Grown
As people are working from home, company and business owners have realized, working with a smaller office footprint is possible. Hence, vacancies in retail and office space are increasing and self-storage is providing the storage space needed.
Unfortunately, divorces have also climbed higher during the pandemic. From March to June, divorces have been 34% higher than in 2019 during the same time period. Apart from that, dislocation and death have also been much more common. Hence, people need places they can store their non-essential belongings, or precious items during these transitory periods of loss. Self-storage has provided the perfect solution.
Self-Storage Spaces are Low Cost
Since storage spaces require empty space above all, they’re cheaper to develop than real estate. Hence, the cost of development is much less, and the payoff is higher compared to homes and hotels. A study shows that multifamily dwellings can develop for $60-$70/square foot and cost $7.50-$12/square foot to rent. In comparison, self-storage facilities cost $34-$42/square foot to develop and $6.50-$12/square foot to rent. Finding a good storage facility does not have to be hard, even during a pandemic, StorageLookup.com has a fantastically easy system to help you find the best Self-Storage facility for your needs.
The self-storage industry is clearly a very resistant industry compared to others like real estate or retail. Its operating costs are low and its returns are plentiful. It also seems like an essential service for those hit hardest during the COVID-19 recession. Hence, its resilience is understandable.