Okay, so now that I’ve got your attention: yeah, there is a sexy side to the world of self storage. It might not be all glitz and glamor on the auction floor. It might often look a little less like the Vegas strip, and a little more like the average queue at the buffet in Epcot Center. But, from an investment point of view, this is a recession-proof asset class that will only grow with vigor. I’ll be the first to admit it, this was definitely not the first word association I came up with when I came into the office today; but, let’s take a look at some of the trends here and see if we can’t make this sexy-self-storage thing ring a little truer, shall we?
About one third of self-storage businesses have established themselves as all inclusive hubs, providing services and counter space for everything from moving-in products and services to conference rooms, coffee stations, and free WiFi for the transient worker out on a mid-length contract. As a result, these newer, big-picture-thinking facilities are gaining more interest and trust from local residents who reside in higher-end neighborhoods where you might not expect to find a storage unit lot. The perception of the self-storage facility has been steadily transitioning from that of a service exclusively of convenience and efficiency to one of luxury-level (yes, I used the word luxury) customer service with all the trimmings. Investors and builders alike are considering newer markets of those renting their units. Facility facades are slowly becoming less intrusive to the eye, and more inviting to potential clientele. The higher the curb-appeal of these facilities, the more willing baby boomers and similar demographics seem to be to voice their expectations for a solid self-storage experience.
Unit sizes in these newer facilities are more expansive, as is the list of services provided, often for free, for renters. A higher number of temperature-controlled and humidity-controlled facilities are increasing in demand. Those families and individuals content with their current living situation, but desiring a secure storage option for family heirlooms, art collections, and even wine-cellar overflow are jumping on board. With an increase in the overall value of the items stored inside, comes a strong push to up the ante on security, too. More efficient, automated security access; kiosks allowing for payments and maintenance requests; as well as motion-sensor lighting and even music are all being implemented with more regularity in this new trend of higher-end storage options.
So what does all of this mean for you? Good question, here’s how it looks to me, so pay attention and take some notes. Basically, the past 5 years of self-storage development has been relatively uneventful. While this hasn’t allowed for a perpetual and flourishing prospect for investors, what it has done is allowed the demand for top-tiered storage facilities to catch up, if not exceed, what was previously available in highly specified markets. As the migration of suburbanites into downtown areas continues, the premium for space continues to grow. With more and more individuals and families eager to either hold onto, or keep in close proximity, items for which they have developed significant emotional attachment, the need to develop fully integrated self-storage facilities is expected to be on a steady rise for the next decade. That said, with a little patience, and some steady research on our part, the contents of these premium units should net a significant return on investment when put up for auction.
The financial trends which are attracting big investors to the world of self-storage have strong implications for the type of clientele that is steadily filling a void in the ever expanding world of this market. The higher the effort to develop a more aesthetic and sustainable product for locker renters, the more specialized your list of previous owners becomes. Odds are, that will make the physical location of where we are sending you for your next storage unit auction far more relevant than previously inferred.
What initially drove business investors to view the self-storage market as a sexy investment, will likely have a profound effect on potential renters who arestarting to consider their storage unit options as extensions of how they are represented and perceived within the confines of their residential and business communities. The more diversified and inclusive the market becomes, the more auctions can be expected. While this might appear to generate more of a grind in the world of storage unit auctions, it is also worth nothing that as higher-tiered facilities become more specialized and amenity-packed, there becomes a good chance that these units, when defaulted on, will yield considerably higher revenue once all is said and done. Sounds pretty sexy to me!