Self Storage Occupancy Levels Increased in 2012
By the end of 2012, occupancy levels for Self Storage Facilities in the USA were approximately 85%. The Eastern US was about 85%, which was up by 3.5% from 2011. The Western US saw levels of 83.4%, which was up by 2.1%. The Midwestern states saw levels of 86%, up by 1.4%, while the southern states saw their occupancy levels increase by 2.5% to 83.2% — this was the highest the region has seen since 2008.
Self Storage Rents are Improving
Rental income for self storage companies increased 6.6% in 2012, compared to the previous year.
New Development – Still Slow
In the last five years there has been very little storage unit facility developments in the United States.There are currently fewer than 200 self storage facilities under construction, which is extremely low considering new development between 2000 and 2005 led to 3,000 new facilities per year. Tight credit markets continue to be the major reason for the lack of new development.
People are Buying Homes Again
The National Association of Realtors reported last week that the national median price for an existing single-family home was $176,600 in the first quarter of this year, up 11.3% from $158,600 during the same period in 2012. That’s the biggest jump in year-to-year home prices in seven years.
Gary Thomas, president of the National Association of Realtors, said in a news release that even though home prices are increasing, consumers still hold plenty of buying power. Most home buyers can purchase “well within their means” thanks to low mortgage interest rates, he said, along with home prices that remain below peak levels.
How Do Raising Home Prices Affect Self Storage Occupancy Levels?
Increasing prices in homes means that people buying – and also MOVING. For the self storage business, Moves translate into storage unit rentals. A recent study by the Self Storage Association (SSA) found that 41 percent of self storage customers rented storage units because they needed temporary storage space while changing residences. As people relocate from one residence to another, the self storage industry should see a steady increase in activity.
Are Americans Considering Downsizing?
We don’t think so – but, a recent survey shows 61 percent of Americans would prefer living in a smaller home. The survey was conducted by the Urban Land Institute.
“On the whole, the survey suggests that demand will continue to rise for infill residential development that is less car-dependent, while demand could wane for isolated development in outlying suburbs,” the Urban Land Institute said in a news release.
Hard to imagine when you think that the average American home has increased its size by more than 900 sf. over the past 50 years. If people do start to down size their residences, many will seek self storage as a place to store their extra items.
Self Storage – Part of the American Lifestyle
Although new development may of slowed over the past few years due to tight credit markets, demand for self storage rentals is very good. America is a consumer society, with two wage earners in the home and more purchasing power than ever before. American households are now consuming twice as many goods as they did in 1970. The result of this consumption is the requirement for more storage space for our newly acquired items than our houses can provide. The fact is that 1 out of 10 American households rents a storage unit (1 out of 16 rented a storage unit in 1996). We do not believe the demand for self storage space is going to slow in the near future, if anything, it will only get stronger as our economy continues to recover from the recession.
Statistic Sources:National Association of Realtors, Self Storage Association (SSA), The Urban Land Institute, Marcus and Millichap Commercial Real Estate Services, and The Storage Facilitator (blog.selfstorage.com).