If you are looking for a commercial real estate investment opportunity, self-storage is definitely an industry you will want to keep a very close eye on. PwC notes that since the 2008 recession, self-storage has been one of the fastest-growing sectors in commercial real estate. What makes self-storage a potentially promising investment candidate?
Low Maintenance Costs
Once a self-storage facility is established, minimal work and maintenance is required to retain customers and attract new ones. The demand for storage space has seemingly kept these facilities profitable and occupied. Furthermore, very little capital is required to keep these spaces competitive with rival self-storage facilities.
Self-storage is an industry that can be prone to thriving in most economic conditions. Ultimately, the industry relies on movement in order to thrive. Job growth and the appearance of several new apartment properties on the market mean people on the move, and increased need for storage looking forward.
While the effect of COVID-19 remains to be seen, early parallels in the shifting interest in this property type 12 years ago following the collapse of Lehman Brothers—and the subsequent Great Recession—are hard to miss. People will endure much hardship before they part with their “stuff.”
Low Interest Rates
We are currently experiencing record low interest rates in 2020. This, in addition to all of the other promising features specific to the self-storage industry, will likely lead to increased investments in the industry.
Factors to Consider
Experts are predicting good days ahead in the self-storage industry. Green Street Advisors expects the current 8% public utilization rate of storage facilities to continue to grow, making it a compelling long-term investment. Before you commit to making any investment, consider these few factors while weighing your options:
- Inferior sites don’t rule out self-storage. Steep slopes can be overcome by going vertical. Tenants don’t care about adjacent power lines.
- The continued woes of shopping center will free up land (and parking lots) for redevelopment to other uses like self-storage, so keeping an eye on potential supply is critical.
- A 3.6% growth in available storage is predicted between 2018-2022. This could potentially impact market share for existing storage facilities.
- Experts say that continued population growth will help to nullify these effects in the long term.
Partner with Willowbrook Valuation & Advisory Services for Assistance with Your Commercial Self-Storage Investments
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