According to online self-storage marketplace SpareFoot, the self-storage industry was estimated to be worth about $32.7 billion in 2016 and is expected to grow by about 3.5 percent annually over the next five years.
Most people use storage at some point, with “one in 10 U.S. residents using storage spaces at any given time,” SpareFoot Web Editor Alexander Harris said. The Austin-based, online marketplace finds self-storage units for customers.
The burst of self-storage construction occurred following the downturn in the nation’s economy, Harris said.
“In Texas, like a lot of the country, the self-storage people stopped building during the economic collapse,” he said. “Slowly, housing started to recover. It took a while for the self-storage industry to actually catch up and start building again. Since, probably 2014, things really started to pick up. Right now, it is at record levels across the country.”
However, Harris said the major cities in the state—Austin, Dallas and Houston—“are starting to get more supply than they need, possibly.”
“There’s not a lot more self-storage construction that can be done,” he said. “The industry tries to keep an equilibrium. They don’t want to cannibalize each other so they concentrate on markets within a 3-mile radius [of each facility]. It’s getting harder to do because a lot of projects have already opened.”
The major reason for self-storage is that people are relocating, Harris said.
“You have record numbers of people moving to the Austin area,” he said. “They need storage in conjunction with a move. Also, apartment dwellers have limited space in their homes, so they often need storage space as well. Urban areas without a lot of square footage available [for] residential—you see a lot of demand for storage there.”
Harris said the millennial generation has shown it is more mobile than other generations.
“That will only continue and create demand for storage,” he said.
The self-storage publicly traded market has been one of the best investments in terms of returns over the past 10-15 years, Harris said.
Mark Sprague, a real estate and financial industry analyst with Independence Title Co. in Austin, agrees.
“I think self-storage will continue,” Sprague said. “Self storage for equity is a great way to park money and get an income. Then, when that property becomes worth more, build an office building or whatever it may be.”
He said self-storage market growth is a byproduct of society.
“I have tons of books even though I have a Kindle,” Sprague said. I don’t want to throw out those books. So I think we will see self-storage continue to go up.”
