The current global supply chain disruption has exposed the importance of storage facilities to the world economy. We have learned that in order to shift to green energy, we must invest in storage facilities, as Pennsylvania has begun to do. We have learned that the success of a global vaccination effort hinges upon our ability to store vaccines in transit and in less-than-ideal conditions. Companies like Rolls Royce have invested in such innovations. All across the world, the importance of storage facilities is highlighted with each supply chain disruption. As we look to 20222, here are four ways in which self-storage will evolve.
Supply Will Outpace Rising Demand
Massive demand has characterized the industry over the last year. This is a function of a growing global population, the need to prepare for supply chain disruptions, and the consequence of pent-up demand from the lockdown period. So far, supply has been able to match demand, with the 2015-2020 period showing a 90% average occupancy rate, according to the 2019 Self Storage Almanac.
Adding to growing demand is the downsizing that baby boomers are undergoing. Millennials are expected to have less use for self-storage units compared to baby boomers, but their demand will add to that of baby boomers and push up the aggregate industry demand.
REITs have poured in capital into this growing market, constructing self-storage facilities across the nation. In 2011, the industry received $241 million in fresh capital. By 2018, this had risen to $5 billion. This is likely to push supply in excess of demand, at least in the near term, according to many experts.
Cities Will Continue Restricting or Slowing the Construction of New Self-Storage Facilities
The effect of supply exceeding demand will be to lower rental prices, or in the least, stop their rise. Despite this benefit, cities will continue to restrict the construction of new self-storage facilities. In the medium-to-long term, this will allow demand to outstrip supply, once again forcing rental prices up.
Self-Storage WIll Be Part of the Shift to Digital
Although the industry is often thought of as being very old school, it too will shift to digital, as consumers will increasingly discover self-storage facilities online, rather than in-person. Walk-ins are becoming less important to the industry. The pandemic accelerated this trend because with movement restricted, people were forced to do their business online. By 2017, online channels were already responsible for the majority of rentals. With the deepening of the digital shift, the opportunities for online discovery are even bigger.
The Sharing Economy Will Extend to the Self-Storage Industry
It is highly likely that the decline in car ownership will continue, freeing up garage space. People can be expected to use that free garage space to store their own property, or, they will use online platforms to rent out their space. This will lead to deflation in the prices of many expensive self-storage facilities. As more people get a portable storage pod, traditional self-storage facilities will come under even greater pressure to reduce prices or go out of business. Somewhere out there is a firm that will do for self-storage what Airbnb did for travel and lodging.
Published by Jacob Maslow