Self-Storage Market 2018

Storage Facility Market

  • According to IBISWorld, annual revenue for the self-storage industry was estimated to be $38 billion for 2017. The average monthly cost for a storage unit was $91.14. Just less than 10% (9.4%) of US households rent a self-storage unit.
  • There are 44,149 to 52,000 self-storage facilities in the US, with the largest companies owning 18%; the next 100 operators own 8%; and small operators own 74%, according to the Self-Storage Almanac 2018.
  • The industry has been growing rapidly, with 7.0% growth from 2012–2017. During 2017 alone, sales increased 4.3%. With increasing consumer spending, the industry is expected to continue to grow.

Average Self-Storage Income per Facility, by Region, 2017

Region / Storage Rental Income / Fee Income / Net Goods Sold and Insurance / Miscellaneous Income / Total Revenues
All US / $785,442 / $38,056 / $18,858 / $19,319 / $861,677
East / $1.22 million / $47,405 / $13,749 / $17,844 / $1.30 M
Southeast / $591,176 / $31,454 / $25,424 / $41,587 / $689,642
Midwest / $572,723 / $38,702 / $22,021 / $4,671 / $638,119
South / $668,382 / $32,868 / $26,254 / $16,203 / $743,709
West/Southwest / $877,963 / $39,852 / $6845 / $16,288 / $940,949

Mini-Storage Messenger 2017 Self Storage Expense Guidebook

What 2018 Has In Store

  • There has been a surge in construction of self-storage units, which began during 2014 and accelerated through 2017, creating abundant supply. Construction spending on these units exceeded $2.27 billion from January through August 2017, an 89% increase.
  • Most construction has occurred in Dallas, Phoenix, Nashville, South Florida, Denver, Portland, Raleigh and Charlotte, or fast-growing metros. Even more units during 2018 will increase vacancy rates and depress rent growth in some markets.
  • Vacancies are expected to increase 80 basis points to 11.1%; climate-controlled rents are forecasted to increase 2.4%; and non-climate-controlled rents will increase 2.6%.

Largest Self-Storage Operators, by Revenue and Number of Locations, 2016-2017

Company / 2017 Revenues / 2016 Revenues / % Change / 2017 Locations / 2016 Locations / % Change
Public Storage / $2.5B / $2.6 B / -2.0% / 2,386 / 2,578 / -7.4%
Extra Space Storage / $1.1 B / $991.9 M / +10.9% / 1,483 / 1,470 / +0.9%
CubeSmart / $558.9 M / $510.0 M / +9.6% / 936 / 919 / +1.8%
Life Storage / $529.8 M / $462.6 M / +14.5% / 675 / 702 / -3.8%
U-Haul* / $286.9 M / $247.9 M / +15.7% / 1,482 / 1,482 / 0.0%
National Storage / $268.1 M / NA / NA / 533 / 629 / -15.3%

Company Earnings Reports (SpareFoot), 2017*self-storage revenues only

Storage Demand Drivers

  • According to Strategic Storage Trust, the six demand drivers are population growth, percentage of renter-occupied housing units, average household size, average household income, supply constraints and economic growth.
  • Household income has been increasing, and by 2.4% during the second half of 2017. Homeownership is expected to be more expensive because of the new tax laws, boosting the rental market. Experts expect the economy to expand during 2018.
  • Baby Boomers are beginning to downsize their households and need storage for items of sentimental family or historic value. This is expected to benefit the self-storage industry.

Boomers’ Most Important Personal Possessions, 2018

Item / Percent
Pictures, photos, paintings / 70%
Family keepsakes / 28%
Jewelry / 16%
Collectibles / 14%
Vehicles / 8%
Furniture / 8%
Sports equipment / 4%
Clothing / 2%

Strategic Storage Trust, 2018

Storage Operations

  • According to a January 2018 presentation from ExtraSpace Storage, the company has the highest same-store revenue compared to major competitors, at a 4.6% increase compared to 3.5% for Public Storage, 4.0% for LifeStorage and 3.8% for Cubesmart.
  • Public Storage generated $1.17 billion in net income for 2017, a decrease of 1.0% YOY. The company attributed this to its interest expense, losses from hurricanes and debt load. Increased self-storage net operating income from higher rents offset this loss.
  • Increasing property taxes in many areas have increased self-storage facilities’ operating costs. The average annual expenses for self-storage facilities is $353,324.

Average US Self-Storage Expenses per Facility, 2017

Expense Category / Amount / Percent of Total / Expense Category / Amount / Percent of Total
Onsite management / $71,686 / 20.3% / Postage/handling / $4,939 / 1.4%
Administrative expenses / $25,629 / 7.3% / Credit card charges / $8,708 / 2.5%
Insurance / $11,857 / 3.4% / Phone / $5,414 / 1.5%
Management fee / $51,173 / 14.5% / Utilities / $22,306 / 6.3%
Real estate taxes / $83,767 / 23.7% / Maintenance & repairs / $24,980 / 7.1%
Advertising/technology / $17,061 / 4.8% / Other / $25,804 / 7.3%

Mini-Storage Messenger 2017 Self Storage Expense Guidebook

Trend and Innovations

  • Self-storage companies have taken possession of empty buildings, such as big box stores, hotels and office buildings, and converted them into storage facilities. U-Haul looks for buildings with 100,000+ sq. ft., good clearance height and working elevators.
  • Millennials, an increasing self-storage customer segment,typically buy services via apps, which has made valet storage popular. These facilities are outside city centers, but they pick up and deliver customer items.
  • Some storage companies are eliminating the on-site manager and substituting automated systems. While reducing costs, this also eliminates upsell opportunities.

Valet Storage Companies, 2018

Company / Markets
ZippBoxx / New York City
Clutter / Los Angeles, San Francisco, New York, New Jersey, Chicago, Seattle, Santa Barbara, San Diego and Orange County
Closetbox / AL, AZ, CA, CO, CT, DC, FL, DC, GA, IL, ID, IN, IO, KS, LS, MN, MD, MA, MN, MI, MS, MO, NV, NJ, NM, NY, NC, OK, OH, OR, PA, RI, TN, TX, UT, VA, WA, WI
MakeSpace / New York City, Los Angeles, Chicago, Washington,
Omni / San Francisco
Trove / San Francisco

TechCrunch, Omni, Sparefoot, ClosetBox, 2017 and 2018

Additional Analysis

According to Colliers International, a real estate valuation and advisory company with a focus on the self-storage market, the most successful investments in self-storage will have the following characteristics:

  • Location in a major metropolitan area
  • A size of at least 40,000 square feet
  • Access to a freeway or major thoroughfare
  • Brick, block or tilt-up construction, with paved asphalt or concrete, in an office-style/multi-level design
  • Well-maintained, newer construction, clean and appealing
  • Proven 90%+ occupancy
  • Low-to-moderate-market saturation with high barriers to entry
  • Onsite managers, video surveillance, individual unit alarms, electronic gate and exterior lighting

Sources:IBISWorld Website, 4/18; SpareFoot Website, 4/18; ForbesWebsite, 4/18; Mini Self Storage Messenger Website, 4/18; Marcus & Millichap Website, 4/18; Strategic Storage Trust Website, 4/18; ExtraSpace Storage Website, 4/18; Public Storage Website, 4/18; Colliers International Website, 4/18; Self Storage Association Website, 4/18; Inside Self Storage Website, 4/18; Tech Crunch Website, 4/18; Both Sides of the Table Website, 4/18; Omni Website, 4/18; ClosetBox Website, 4/18.

Updated: April 2018

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