The Projections Are In: What Can We Expect Over the Next 5 Years as Self-Storage Investors?
As keen investors and sponsors, we’re constantly keeping a forward focus on what’s coming down the line. Identifying potential challenges, for example, can help us make more prudent decisions now regarding which opportunities we invest in and which we’re better off passing on.
You’ve likely experienced in some way the economic challenges impacting nearly every financial sector in recent years—high inflation, rising interest rates, a competitive housing market, and more.
Now, as these hurdles start to ease up and we enter into a period of growth a recovery, the forecast ahead is looking much brighter. Let’s explore what may be coming down the line, and how that impacts you as an investor.
What Experts Are Predicting for the Future of Self-Storage
A recent press release from Technavio shared some optimistic insights on the state of self-storage—including what we can expect to see happen over the next five years.
We find that having projections like these are very helpful both for our team and for our community of private investors. Why? Because they can often confirm our own findings or estimations and give us a sense of what others see happening in our industry (and on a broader economic scale). Having our own beliefs either validated or challenged helps us expand our viewpoint (in other words, get out of our own “bubble”) and enhance our credibility as knowledgeable real estate investors and experts.
While predictions are never certain guarantees, they do help us make forward-focused decisions about acquiring and selling our self-storage facilities.
So without further ado, here’s what Technavio’s latest findings say:
The self-storage and moving services market combined will grow an estimated $51.53 billion by 2028, with a compound annual growth rate (CAGR) of 8.95%.
The release mentions that in 2024 specifically, growth looks promising based on a few early indicators.
Technology: First, more self-storage facilities are embracing and adopting software—and more specifically, automated solutions. We’ve seen firsthand that from QR code sign-ups to online payments, our facility customers expect a digitally driven experience. Technology has the ability to take away any friction potential current renters may be feeling by automating payments, providing secure facility access, and more. Plus, automation and technology are streamlining operational efficiencies—saving operators time and money.
Expanded Services: This is moreso on the moving side of things, but operators and business owners are getting creative with the add-ons available for purchase. Professional packing and unpacking solutions, for example, can help operators increase their bottom line with little additional expense.
Specialized storage: We’ve talked before about how a slowdown in the housing market has more self-storage operators turning to specialized storage solutions. In particular, we’ve seen an uptick in storage options for boats, RVs, and cars. Even trailer parks, for example, are either creating their own self-storage space or partnering with existing facilities to give homeowners a space to safely store their belongings (since trailers typically don’t include basements, garages, and attics).
Potential Future Challenges for Self-Storage
In terms of potential challenges over the next five years, the release did cite an expected increase in competition due to the self-storage marketplace being so fragmented (meaning the market consists of a lot of smaller companies, as opposed to a few large corporations/enterprises).
This is something our team at Belrose is acutely aware of and have positioned ourselves well to overcome this challenge, namely by relying on our extensive network of owners, operators, and real estate professionals.
Join Belrose’s Inner Circle
Following a challenging period of recovery and adaptation post-Covid, we’re optimistic about what the coming years have in store for our industry. So far, 2024 has experienced 7.55% year-over-year growth according to the report, indicating that the growth momentum is finally accelerating.
If you’re curious about what it looks like to invest in self-storage, we highly recommend finding a trusted syndicate like Belrose with a track record of transparency, impressive performance, and an unwavering dedication to its community of investors.
To hear about our upcoming investment opportunities, become a member of our inner circle today.
