t’s possible to believe there’s an imminent oversupply in the near term while also recognizing the strong long-term demand for self-storage. Our firm has invested in self-storage assets for over three decades, and here are five key reasons why we continue to do so.

A few decades ago, particularly before the internet era, self-storage was far less recognized by the public as an option. Today, more households are aware of self-storage and its benefits. The Steady Demand Growth Chart, from Extra Space’s June 2024 Investor Presentation, reflects the period during which our firm’s principals have operated facilities. We believe that one of the core drivers of demand growth over the decades has been increased consumer awareness and education. Still now, more and more people are aware of self-storage as a solution.
See Steady Demand Growth Chart.

Younger people tend to have more aggressive spending habits, driving demand for additional storage solutions. While it’s often said that younger generations prefer experiences over “stuff,” data shows they lead in retail spending categories. While boomers were often raised to hold onto possessions (think Dust Bowl survivors as parents versus those more accustomed to fast fashion), the spending patterns of younger generations indicate a higher frequency of purchases. These consumer behaviors typically align well with the self-storage sector.
See Annual Consumer Spending by Generation Chart.

The average square footage of homes is decreasing, and townhomes, which are becoming increasingly popular in many real estate markets, often lack sufficient driveway space, forcing garage parking and limiting storage options at home. In Q4 2023, townhomes accounted for nearly 20 percent of new housing starts, with single-family attached starts up 27 percent compared to the same period in 2022. Residential developers are frequently making concessions on the size and space of homes to meet housing demand while strategically controlling construction costs. About 95 percent of respondents from a Home Innovation Insights study said they utilize their garage for storage; in 2013, 16 percent of those respondents said they do not park their vehicles in their garage due to the amount of items stored within them. So, as we see more communities with less driveway parking available, and HOAs increasingly enforcing parking standards, we are seeing more residents parking in their garage, forcing them to seek storage solutions elsewhere. Less space at home, for driveway parking, and in the garage positively impacts self-storage demand. The median home size by square footage in the U.S. reflects the trend of decreasing availability for storage at home.
See FRED – Housing Inventory Chart.

Younger generations are purchasing homes later in life, with the average age of a first-time homebuyer increasing from 30 years in 2010 to 35 years today. Renters, who tend to move more frequently and have shorter tenures compared to homeowners, are more likely to need self-storage during this extended period of renting. While the Mover Rate for Renters Chart is outdated due to infrequent updates from the Census Bureau, it still illustrates a higher frequency of moving among renters.

However, to play devil’s advocate, the fact the older generations have an extended tenure (now more so due to “locked-in effect” of low rates from recent years) means they are moving far less frequently. The question is: Does being the in the same home for them mean they need storage due to lack of space overtime?
See Mover Rate for Renters Chart.

Historically, 10 percent to 20 percent of a typical rent roll is made up of business tenants, and the number of small businesses has been booming. There are 33.2 million small businesses in the U.S., and according to the U.S. Chamber, 99.9 percent of all U.S. businesses are considered small businesses. In 2021, a record-breaking 5.4 million new business applications were filed. Many individuals turned their ideas and hobbies into home-based businesses. Business tenants tend to be the best customers; they stay for twice as long as a residential tenant and typically have better credit and propensity to pay their rent without much delinquency.

Small bay industrial spaces have become highly sought after, with landlords often requiring longer leases and credit applications in competitive markets. In contrast, self-storage’s month-to-month rental terms and ease of rental make it an attractive option for many business owners. Some of our facilities have business owners renting between five and 10 units side by side, providing them with the flexibility to expand and contract as needed. This flexibility is a key reason why business tenants often remain longer and endure economic cycles, as they don’t find better alternatives elsewhere with more traditional options.

Generally speaking, demand is much more fluid than identifying the supply side. But the statistics give hope for increasing self-storage demand growth over the long term.