More than one-fifth of Americans have put their stuff in a self-storage unit, with Gen Xers leading the pack, according to a new study from Yardi’s StorageCafe, a marketplace for those looking for storage options. Investment activity has also picked up despite less-than-favorable interest rates.
Yardi’s study found that Gen Xers — people ages 40 to 55 — are the most likely to be self-storage customers because of remote workforce opportunities and economic pressures.
“There’s been migration patterns into new areas, and with a shortage of housing available, they’ve chosen to rent smaller places because of the economy,” Yardi Business Intelligence Manager Doug Ressler told Benzinga.
But it’s not just homeowners using self-storage. Yardi found it’s also a target for retail locations looking for more space for its product. Overall, the study showed “not having enough space at home” was why 40% of customers use self-storage, which usurped moving (34%) as the former top motivation.
The sector has also seen a recent jump in investment — Extra Space Storage acquired Life Storage, making it the biggest self-storage operator in the nation. Colorado-based Spartan Investment Group acquired Lafayette Parkway Self Storage in LaGrange, Georgia. The company, which has experienced significant growth, launched its first self-storage fund last year — Spartan Storage Fund 1.
Prestige Storage purchased a 490,302-square-foot self-storage portfolio in the Michigan towns of Muskegon, Fruitport, Spring Lake, Kent City and West Olive.
“What we are seeing is a consolidation of the big guys. Mom and Pop are selling off to larger investors, who are building up their portfolios,” Ressler said.
Yardi reports that performance expectations for the rest of 2023 will most likely mirror a disappointing fourth quarter in 2022, which saw an unexpected and elevated level of moveouts beginning in early September.
“It’s a risk-averse asset to add to the portfolio because if you buy an office building, you’re locked into a seven-year lease term,” Ressler said. He also pointed to a drop in demand for climate-controlled units as a trend affecting the sector as a whole.
“They’re moving away from them because of the stuff they’re storing. They don’t need the climate-controlled option for a couch,” Ressler said. “It’s also a matter of cost. Renewal rates for the climate-controlled units are pretty pricy.”
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