23 Jul 2019
One of the major factors to consider when entering the self storage market, is understanding the end user. Why is there a substantial difference in success between self storage and other real estate? What are the key elements that give self storage the extra edge for surviving tough economic times? The first thing an investor must understand is what happens to the end user–residential and commercial customers–during the swings in a market’s economy.
During times when a market is experiencing an economic recovery, business activity begins to thrive, employment opportunities increase and the sales of new and existing single-family homes start to climb. One would expect self storage properties to do well; most often, they do.
On the commercial side, increased business activity means an increased volume of self storage commercial tenants. However, the reverse effect still causes the same mobility that most often benefits self storage.
This mobility and need for more affordable space benefits self storage.
Commercial real estate also require constant TI costs at turnover which places further upward pressure on the rents.
This makes self storage a welcome cost saving alternative to financially strapped end users in a tough economic environment.
The self storage industry is undoubtedly one of the most stable and reliable investment vehicles available to commercial real estate investors.
In a stable and growing economy, self storage continues to be space in high demand as businesses expand, consumer buying power increases and more space is needed. The low barriers to entry in the self storage industry are a threat, but a topic for another time. See you next quarter. Happy investing!
