Do you want to make a bet about self storage demand in the age of coronavirus?
I bet demand goes up as a result of the quarantine in the US.
It is too early to tell here in the US, and we are mostly dealing with how to manage our facilities differently, stay on top of collections, and work with customers who are experiencing financial hardships.
But I bet with all the people at home, it won’t be long before the thing to od is clean and reorganize the house (it has been long underway in our home and hint…it wasn’t me).
In sub-markets where the median income is higher, my bet is that soon, a new wave of customers are coming with “stuff” as a result of cleaning up their homes during the stay in place period.
United Kingdom
We already see increased demand in the U.K.
According to Google Trends data reported by Storage World, which operates three self-storage facilities in Manchester, England, online searches in the U.K. increased 21 percent in March vs. the same month last year.
An April 1 online article on the ISS (Inside Self Storage) website says that “Storage World experienced a 35 percent increase in customer phone calls and a 20 percent bump in overall inquiries last month, compared to the same period last year. Company officials attributed the increase to workers needing to make room for home offices, workout space, and other adjustments.”
In some facilities, the new demand I am predicting may replace some of the customers hit particularly hard from the extremely high numbers of job layoffs. However, I bet in some sub-markets, this could actually result in a net increase.
The Economy
It’s too early to tell if we are in for a long, slow economic recovery when the stay-in-place orders are removed. It is also too early to say how working may look different as a result of so many people having to operate from their homes.
My bet is many people will alter what it looks like to “go to work.” I bet more people than ever will remain operating from their homes even when governments rescind the stay-in-place orders.
Self storage will be needed as people re-organize their homes to support their new work practices. The higher the household income, the more I think self storage will be utilized.
Now, this is all speculation at this moment in time. But, as business owners, that is our job. It’s our job to look at what is happening, predict how what is occurring will impact our business, then pull the right levers and dials as a result of what we anticipate.
In the past downturn, self storage did very well compared to all other income-producing real estate sectors. I see no reason why this season should be any different. There is still a lot of room for increased use of our product, with only about 10% of the population using self storage currently.
Imagine the demand if that moved to 12%? In the US, that 2% increase would represent over 6.5 million more people needing a storage unit.
I have said before that the next decade in this industry looks bright, and that is one of the main reasons why. Each decade, a higher percentage of the population uses self storage, and it is still so early in the life cycle of this product, that percentage is still increasing.
So although COVID-19 has created a massive
amount of issues for us as Owners to deal with, in the long run, I think it could increase demand for our product.
There has never been a better time to get into the business. Well, that is not entirely true. Perhaps the best time was ten years ago. After that, the next best time is now.
