I would like to share some takeaways I got from the 2017 Self storage Economic Summit I attended in September of this year.

It was eye-opening.

Let me share the Short Term Analysis and Long Term Analysis then my summary of them.

Short Term

Some of the main drivers that fuel self storage are still strong, like job growth and household formation.

They peaked in 2014, but are still going fairly strong.

Self Storage rents are at an all-time high, 30% above their 2008 levels.

An interesting statistic I came across that I had never seen before was US population are paying 3% of the household income on self storage. This will be an interesting stat to start to track over time.

Also, when data providers start using this statistic in retail reports, it could be another benchmark for us.  It would allow us to check the viability of an area for self storage and not just have to rely on square feet of self storage per capita number.

Another item that is occurring is self storage operating expenses are going up.

As more self storage is coming online, marketing costs are on the rise.  Property taxes are going up for this product as well.

Also currently construction time is approximately 25% longer than a few years ago. Trades and manufacturers are behind schedule due to the increased demand.

Long Term

The US population growth rate is expected to slow down.

Over the past thirty years, the US population has been growing at about 1.3% per year. According to the projections, that is expected to be reduced by as much as half over the next thirty years.

The percentage of the population using self storage is still going up. In the first seven years of this decade, it has grown as much as the entire decade from 2000-2010. It is up 2% so far this decade.

The overall stats of the percentage of people using self storage varies depending on the source. But both sources I have seen show the increase at 2% more of the US population so far this decade are using self storage. That is almost double last decade.

Putting It All Together

In short, be careful.

What is frustrating is that it is possible to build and develop intelligently and not to overbuild in any certain markets and submarkets. However, I see facilities going up that are obviously going to oversupply certain submarkets.

You will hear about certain major markets such s Houston, Dallas-Fort Worth and Austin being overbuilt.

Perhaps statistically they are. These are red flags, but remember, self storage is a sub-market phenomenon. There are sub-markets in Houston that are in great shape.

What this shows is that one has to be very careful and engage in more due diligence before putting a self storage project in service.

I have access now to lots of data on many markets in the US. If you are interested in getting preliminary data reports on the current existing self storage in any market, or a specific address or facility in any market, Click the button below for more information

I don’t have information for the entire US, but I have data for much of it.

THIS DOES NOT REPLACE A FEASIBILITY REPORT AND YOU WILL HAVE TO VERIFY THE INFORMATION YOURSELF. I can not and will not warrant it.  But I will share the data I have access to for a nominal fee in the hope of supporting the smaller investors in making informed decisions about starting or growing their self storage business in a strategic way.

In the near term, we need to be very careful. There is still a lot of demand, and still a lot of markets that have unmet demand. Your job is to find them.

In the long term, self storage still appears to have a bright future. Although overall population growth may be slowing down, demand for self storage is still growing.

There is also migration within the US as well as an increased percentage of the population using self storage.

There is nothing on the horizon that appears to be a major disruptor of the industry.

It is important we keep our eyes open for disruptors, but so far I have seen none. “Pods” didn’t disrupt the industry, “Consigner Storage” has not disrupted it at all that I can see.

We are still a consumer driven culture and economic system. The long-term viability of the drivers of self storage, such as jobs and housing appears to be strong. Even in recessions, this product performs at a higher rate than any other real estate sector due to the nature of the service.  People in transition often use self storage and both good times and hard times cause transition).

The main take away I received from the Economic Summit is this is a sophisticated business. Knowing the data before building or buying has never been more critical.

There is no reason to not know the health of a submarket, supply demand, number of projects in the pipeline for that submarket.  All of the information that could lead to oversupply.

We now have access to the information, so use it. Grow intelligently. Don’t just put up a facility anywhere or just because you have the land.

If you get in or grow strategically, you can have a long, fulfilling, and prosperous career in the self storage business, the greatest business on earth.