New Self-Storage Demand Will Outpace Provide

CRE Loan Originations Expected to Fall By 40%

The new demand for self storage is expected to outperform supply. In recent years, the strong demand for self-storage has driven the development of self-storage. The level of construction has raised some concerns that supply would exceed demand; However, new trends in demand show that demand is growing faster than supply can keep up.

“Forbes anticipates that the demand for self-storage will continue to grow, but the new supply could exceed it thanks to the flood of new buildings. Industry analysts believe this will lead to a decline in the high returns of some of the biggest players in the industry, which in turn could translate into lower rental prices as operators compete for new business. " Dave Hettinger, Senior National Account Manager at Motilitells

In some markets, the imbalance between supply and demand is ensured by restrictions on new development. “Municipalities in the US limit the growth of self storage. For example, New York introduced a zoning freeze in 2019, so it takes two years to get permission to build new facilities, ”says Hettinger. “The increase in restrictions could lead to increased rental rates if demand continues to rise and additional supply is hampered. City officials pointed to the lack of space and the relocation of companies that would use the space to create more jobs. "

The expansion of the self storage industry is a global trend, but the largest market is in North America. "The expansion of the storage industry has affected global markets that share common factors," says Hettinger. “The largest self-storage market may be in North America, but the fastest growing is the Asia-Pacific market. And unsurprisingly, revenue for the storage industry is expected to decline for the remainder of 2020 as economic activity continues to be hit by the COVID-19 pandemic. IBISWorld assumes that profit margins will decrease, but they will remain high. "

However, the downsizing of communities will continue to fuel demand, especially in large metropolitan areas. "The self-storage market is also still robust in the USA and in other regions," says Hettinger. "As communities shrink and look for places to keep their parents' belongings and memories, and even look for additional space for corporate inventory, self-storage will continue to be an important business area."


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