From Culture Wars to Market Cycles: What Investors Need to Know About Self-Storage

Self-Storage in the Age of Culture Wars

As a self-storage investor and operator, I have seen the industry evolve and change over the years. Recently, the market has shifted in a direction that requires us to change our approach to both sellers and investors. The current state of the world has created a culture of fear and uncertainty. This current state of culture uncertainty has made investors cautious and hesitant to invest. With that in mind, I wanted to talk about some things to help shed some light on the current state of self-storage income and how to navigate these changes.

Understanding Market Cycles

One of the biggest changes in the self-storage industry is the current market cycle. The last decade has seen some of the greatest growth in the industry's history. However, with the recent economic downturn, investors have become more cautious and are looking for operators that have experience in navigating current market cycles.

As a company that has been through several recessions, we are in a unique position to take advantage of this change. Our experience in navigating the ups and downs of the market gives us a competitive edge over newer operators who have only seen growth in the industry. By highlighting this in our marketing, we can show investors that we have the ability to execute and that they can be confident in their investment with us.

Culture Wars and Migration Patterns

In addition to market cycles, culture wars are also affecting the self-storage industry. We are seeing people move from state to state due to political differences, leading to significant changes in migration patterns. This trend is not going away anytime soon, and it is important to understand how it is affecting the industry.

One of the most recent examples of this is the recent change in abortion laws and the potential overturning of Roe V. Wade. For some, it might be a draw to move to a more conservative location. For others, it's a warning bell to leave. 

While I try to stay away from political debates, it is important to acknowledge that culture wars are real and are affecting our industry. They are driving policy and economics, and we need to be aware of their effects on migration patterns and self-storage income.

So, let's dive into the real meat of today’s topic: self-storage and how to generate revenue. As stated, self-storage has proven to be one of the most resilient and consistent real estate investment opportunities, even during times of economic uncertainty and recession. With this in mind, let’s take a closer look at why self-storage has seen such consistent success despite economic fluctuation.

Why is Self-Storage a Good Investment?

• Consistent Demand: Self-storage facilities are in high demand due to the increasing need for people to store their belongings. People are downsizing their homes, moving frequently, or simply looking for a secure place to store things. This demand has been consistent for many years and is expected to continue.
• Diverse Tenant Base: Self-storage facilities have a diverse tenant base, which reduces the risk of vacancy and loss of income. No matter the economic situation, people will always need a place to store their belongings.
• Stable Revenue Stream: Self-storage facilities provide a stable revenue stream due to long-term leases and the ability to increase rent over time. This stability makes self-storage a low-risk investment opportunity.
• Potential for High Return on Investment: The return on investment for self-storage facilities can be substantial, with some facilities yielding a return of 10-12% or higher. This is due to the consistent demand and low vacancy rates.

Self-Storage During Economic Uncertainty

Self-storage has proven to be a resilient investment opportunity even during times of economic uncertainty and recession. According to a report by the Self-Storage Association, self-storage occupancy rates remained steady during the 2008 financial crisis and continued to grow in the years following.

This is due to the fact that people still need a place to store their belongings, regardless of their economic situation. Additionally, during times of economic uncertainty, people are more likely to downsize their homes and rent a self-storage unit, providing a source of additional income for self-storage facilities.

Conclusion

The self-storage industry is changing, and it is important to be aware of these changes and how they are affecting our industry. By understanding market cycles and culture wars, we can navigate these changes and continue to see growth in our self-storage income. As always, it is important to focus on our ability to execute and provide a solid investment opportunity for our investors. It is important to cultivate an environment of expertise based on experience, adaptability, and trust. This is something we are able to provide our investors. We’ve been through the difficult economic changes, and we are prepared to endure the current economic state driving by shifting politics and a shifting cultural landscape.