The self-storage sector is in a tremendous growth and development phase in line with the rapid integration of advanced technologies such as machine learning and artificial intelligence. Valued at about $61.2 billion in 2022, the self-storage sector is projected to be worth $101.8 billion by 2032 as it grows at a compound annual growth rate of 5.3%, according to Data Horizon Research.

Self-Storage Demand

The rapid growth can be attributed to self-storage facilities becoming popular as a safe and secure option for storing personal and business belongings. The robust growth can also be attributed to Americans’ growing propensity to accumulate more stuff than they can squeeze into their homes.

Self-Storage Market Growth Outlook and Investment Opportunities

The self-storage facilities offer rental spaces in various sizes that allow people to store all kinds of items. In addition, they come with both short-term and long-term options. Additionally, there are storage options for people of all income levels, catering to all markets. For instance, people looking to downsize or move to smaller homes will always find storage facilities for storing all kinds of items they have. The safety of the items stored is also assured as customers must take an insurance policy that covers the value of items stored in the facilities.

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As self-storage facilities become increasingly popular, they also give rise to unique investment opportunities that people can take advantage of.  While only 10% of the US population uses self-storage facilities, there is significant room for growth, which affirms the sector’s long-term prospects.

Storage facilities have always been rare solid investments that tend to do well in good times and spectacularly during economic upheavals. Profits exploded in the sector at the height of the COVID-19 pandemic, when people were forced to convert their bedrooms into offices, and basements became gyms amid the work-from-home trend.

The shift triggered a significant increase in unwanted items that had to go somewhere as people needed ample spaces to work and live in their homes. On the other hand shares of publicly traded storage companies have always trounced the overall market and other real estate sector. The outperformance was even more evident at the height of the pandemic.

Investors eyeing exposure to the burgeoning self-storage sector can do so by purchasing the ReelShares Self Storage Fund. The fund invests more than 80% of its assets in a diverse range of self-storage investments, including value-added self-storage assets, repeatable prototype builds, industrial and big box assets, and conversions of distressed retail.

While the self-storage industry experienced a record-setting performance at the height of the COVID-19 pandemic, investment activity remains strong. Mobility has always been the number one factor driving people into the sector in need of self-storage services. Whenever people buy or sell homes, they always look for storage facilities to store some of their items as they relocate.

Interest Rate Cut Impact

Last year, mobility was under immense pressure amid the high-interest rate environment. The US Federal Reserve’s hiking interest rates rendered most homes expensive beyond the reach of most would-be home buyers. With sellers unable to offload their homes, demand for storage facilities was under pressure.

Fast forward, the US Fed has hit its peak on monetary policy tightening, with interest rates expected to come down significantly. A cut in interest rates from the current 22-year high could offer significant support to the self-storage sector.

A decline in interest rates should see mortgage rates decline significantly, which should see most people flock to the market in pursuit of cheap homes. As more people look for homes, the expected movement or mobility from one place to another should create a strong demand for storage facilities.

Self-Storage Deals

Appetite for deals is also strong in the industry as industry players look to strengthen their competitive edge.  Extra Space, one of the big players, has already spent $11.6 billion to acquire rival Life Storage to create the largest storage operator in the US with over 270 million square feet at more than 3,500 locations.

Additionally, university endowments insurer’s sovereign wealth managers and pension funds have invested over $2.5 billion into a private equity fund run by storage specialist Prime Group Holdings.  With the investment, the company has succeeded in acquiring over 100 properties to be used as storage facilities.

As consumer demand for additional storage space grows, the UK self-storage market is also in a robust growth phase. Self-storage companies like Big Yellow and Safestire have seen their revenues grow by more than 5% as demand for storage units remains strong despite the inflationary pressures. About 2% of the UK population uses self-storage facilities, with the country having the most self-storage per person than any other European nation.

Investing in the self-storage sector is one of the best ways of diversifying an investment portfolio. The industry has shown ability to withstand economic downturns and outperform the overall market. As most real estate investment trusts incurred significant losses during the 2008 recession, self-storage assets showed a positive return of more than 5%.

Investing in ReelShares Self Storage Fund

The resiliency can be attributed to the fact that occupancy rates have always been more than 90%, even in times of market turmoil. Demand for storage facilities has been rising in line with the surge in the residential rental market that has fuelled the number of young people using self-storage. Companies have had to diversify into smaller format stores in high-density areas to address the market need.

The ReelShares Self Storage Fund offers one of the best ways of gaining exposure to the sector and diversifying an investment portfolio. The fund seeks to deliver an annual rate of return of at least 35%. The fund charges an annual fee to investor accounts. The fee is based on the account value. The annual fee is 1.30% on the individual investors account and 1.00% on the institutional investor accounts.

For the initial investment, you may purchase shares of ReelShares Self Storage Fund directly from Reel Shares or through a financial intermediary that has a relationship with ReelShares. The shares can be traded on the NYSE after the initial purchase.

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