Self-Storage Industry Withstands Economic Volatility Through COVID-19

Self-storage units are a service that can be used by those planning a change in residence, downsizing or in need of more storage space.  

A report suggests that self-storage may have benefited during the pandemic from people needing more storage as they relocated or made room for home offices to work remotely. According to the 2021 American Community Survey (ACS), the percentage of people working from home nearly tripled from 5.7% in 2019 to 17.9% in 2021.

In addition to telework flexibilities, some people relocated, including 32% of millennials and Generation Zers who moved back in with their parents during the pandemic, according to one survey.

As of March 2023, Worldwide ERC, a relocation services trade group, reports commercial office space usage was 50% of pre-pandemic averages. Since the pandemic began in 2020, more businesses have been opting for a hybrid or remote work environment which may create an increased need for mini-warehouses to store unused equipment and furniture. 

The self-storage industry’s ability to withstand economic downturns has also been evident in data from the National Association of Real Estate Investment Trusts (NAREIT). A REIT is a company that, in addition to meeting certain shareholder and investment requirements, owns, operates or finances income-producing real estate, such as self-storage units.

In 2008, amid the Great Recession, most REITs suffered losses, but self-storage showed a positive 5% return, according to NAREIT.

Occupancy rates provide more evidence of the industry’s resilience. According to S&P Global Market Intelligence, self-storage occupancy averaged 96.5% in the third quarter of 2021 compared to 91.5% in the first quarter of 2020. 

Some other factors that may have benefited the self-storage industry during the pandemic are:

• Minimal face-to-face interactions. The industry has embraced new technology including online renting, self-service kiosks and smart-entry cloud-based technology.
  
  
• Low operating costs. Self-storage units have relatively simple building structures with fewer maintenance needs than other commercial real estate.
  
  
• Short-term leases. Operating on short-term leases can be beneficial during unstable economic conditions because it allows owners to adjust rental rates more frequently.

The latest 2021 SAS includes estimates and accompanying measures of sampling variability and sheds some light on additional industries, like those outlined in this article.