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Why storage space is hot right now

By Mike Wheatley | October 15, 2015

If you're looking for a new niche in real estate you could do a lot worse than storage units, according to a new report in The Wall Street Journal. Storage units have been hit by a shortfall in construction, and that's leading to rising rents and limited vacancies, the report says.


Photo Credit: HI-MATIC AF via Compfight cc

The success of self storage units comes in stark contrast to the rest of the commercial real estate sector which is still relatively flat. And that success isn't just limited to the units themselves – The WSJ says investors are even taking to buying up shares in storage unit companies, which is why we saw a 33 percent increase in Extra Space Storage Inc.'s share price over the last year. That company reports a 94.5 percent occupancy rate, up 2.4 percent from one year ago.

The WSJ posits that one of the reasons for the stability seen in the storage industry is that people require storage space no matter what. Whether the economy is thriving or in recession, incidents such as death, divorce, downsizing and dislocation will always happen, and that means people will always need somewhere to stow things away.

“[The storage space industry] isn't recession-proof, but it is recession-resistant,” said Ryan Burke of the Green Street Advisors real estate analysis firm.

With such high demand and occupancy rates, it's little wonder that storage firms are racing ahead with construction to provide even more facilities. The WSJ reports Carlyle Group LP is building new facilities in the Pacific Northwest, Southern California and other locations at a cost of $80 million.

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
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