Self-Storage Market Has Flourished in the Last Decade

The self-storage market has grown significantly over the last decade. Each year since 2012, the market has grown by 8%, and the average self-storage operator has experienced a 41% profit margin.

“The self-storage market has never been more active, booming over the past decade,” Dave Hettinger, senior national account manager at Motili, tells GlobeSt.com. “By the numbers, the self-storage industry has grown by almost 8 percent each year since 2012 and last year’s annual revenue was valued at $39.5 billion, according to IBISWorld’s Storage and Warehouse Leasing Industry report. 1 in 11 Americans uses self-storage and pays an average of over $90 per space to rent it.”

Looking at the strong profit margin, self-storage as outperformed every other asset class. “The storage industry is expanding at rates unseen in other markets. There’s no question that the self-storage industry opens a pathway to profits for investors, owners and operators. On average, storage operators enjoy an enviable 41% profit margin, compared to the 22% average profit margin across all industries,” says Hettinger.

There are a handful of factors driving the success of the self-storage market, including downsizing baby boomers, more demand for smaller living spaces in the urban core and businesses that need to store items in a more affordable option than renting additional commercial space. All of these factors have driven the growth in the self-storage market, and position the market for more growth in the future. “Annual revenue for the self-storage industry has increased drastically in the past decade, with 2019 revenue 49.4% higher than 2010 revenue,” says Hettinger. “Mordor Intelligence predicts the self-storage market will exceed $115 billion by 2025 making self-storage one of the fastest-growing sectors of the US economy.”

Developers are responding to the market growth, and as a result, there has been a boom in new construction. For now, the market is meeting demand, not exceeding it. “It’s interesting to note that despite the surge in building over the past few years, the US is close to maxing out its storage capacity. More than 90% of available self-storage space is occupied,” says Hettinger. “In 2018, the number of self-storage facilities in the United States ranged between 45,547 reported in the 2019 Self-Storage Almanac, and 60,024 reported by IBISWorld in 2020. The average of those two stats exceeds the total of all Starbucks, McDonald’s, Dunkin’ Donuts, Pizza Hut and Wendy’s locations combined.”

Operators are also adapting to capture new demand. “Self-storage owners keep looking for ways to set themselves apart from others in the business and as a result, a great deal of innovative self-storage trends like remote monitoring, robotics and self-storage management software are now available for consideration,” says Hettinger. “In fact, self-storage facilities are engaging with cloud-based software to improve the customer experience and provide owners with data on every aspect of the business, automating tasks, saving time and money.”