Question #
What major trends are shaping the future of the self-storage industry?
Answer #
So as I look into the future as part of what I regularly do as a business owner, I am realizing the self-storage business of before will most likely not be the industry of the future.
If you relate to the industry in terms of a human life cycle, when I first entered the storage business in 1995, the industry was, let’s say, a toddler.
It wasn’t in its infancy but definitely wasn’t a mature industry.
Today, it is an adult approaching middle age.
It has become very sophisticated and is evolving rapidly.
As I look ahead, many of the industry’s defining characteristics are changing right before our eyes.
Let me share a few trends I see shaping the future of self-storage.
Some may seem futuristic, others may appear routine, but all of them will affect us smaller self-storage owner/operators.
In the past, we could always rely on some income growth.
Even during the Great Recession of 2008 through 2010 or so, we grew about 3% per year in average income growth.
That is not the case anymore or into the future.
You can underwrite that way, but the reality is some years it is now negative.
You can thank the REITs for that.
As much as I hate the game of dynamic pricing, and even if you choose not to play that game, in most markets, dynamic pricing will impact what you can charge for rental rates.
You had better underwrite accordingly, or you may be one of the many “for sale” facilities at 35% occupancy, or your new building is at 35% occupancy, and your interest-only time has run out.
Source: The Storage Business I Knew Is Gone–Here’s What’s Coming Next
