Editor’s note: The following op/ed piece is the opinion of the author. Interested in submitting your industry observations? Contact editor@sparefoot.com

Traditionally an overlooked industry, self-storage has seen a surge in new customers and a growing interest by commercial real estate investors over the last few years.

According to a recent market forecast by IBISWorld, revenue in the U.S. self-storage industry is anticipated to exceed $30 billion by 2018. Factor in Statistic Brain’s research, which found that the U.S.’s 58,000 self-storage facilities boast an occupancy rate of 87.4 percent (held by nearly 10 percent of the total households in the U.S.), and it’s easy to see how this oft-forgotten real estate sector has taken the country by storm.

Let’s take a closer look at this newly-thriving industry:

Self-storage is as close to recession-proof as it gets

Unlike glamorous investments in shopping malls and shiny office buildings, you don’t need to be part of the One Percent to invest in self-storage. Instead, investors can purchase shares of an equity real estate investment trust (REIT), which are publicly traded shares with competitive dividend yields. While no investment is without its risks, however, the National Association of REITs (NAREIT) reported that during the 2008 financial crisis, self-storage was the only REIT sector to post a positive total return (5%, including dividends).

You don’t have to hustle to turn a profit

The “breakeven” occupancy rate of a self-storage facility is significantly lower than other asset classes of businesses attached to real estate, like hotels and senior housing. According to The Appraisal Journal’s findings on self-storage economics, the breakeven occupancy rate for a self-storage facility is approximately 40 – 45 percent, as opposed to the 60 percent or greater occupancy rate for apartments. As such, self-storage facilities often hold value better and experience faster recovery than other assets when real estate markets suffer a loss. Additionally, self-storage often boast the highest total annual returns over 5-, 10-, and 15-year averages.

Facilities have undergone makeovers

Long gone are the days of mom-and-pop businesses with little more to offer than bare bone units comparable to a large closet or small garage. Today’s self-storage facilities can be found in populated areas and are convenient, sleek, clean, and safe. Many feature loading docks, on-site packing supplies, moving trucks, a variety of unit sizes, climate-control, full-time staff, security guards, surveillance, and multi-checkpoint access.

It’s not just for keeping extra stuff anymore

More and more small businesses are utilizing business self storage units as a home-base for their operations. Doing so keeps their overhead low, gives them freedom not often found in leases, and eliminates the need to maintain a security system. Climate-controlled units ensure that inventory and records are well-maintained, and the location of the facility can give businesses a more desirable zip-code at a much lower price.

It isn’t surprising then that self-storage providers are entering new markets and expanding their presence in existing ones. 

Stephen Schwartz