The United States self-storage market is expected to register a CAGR of 2. 02% over the forecast period 2021 - 2026. Despite the disruption the COVID-19 pandemic has created for various industries, certain business types still offer investors opportunities during the recession and are expected to perform well into recovery.
New York, Nov. 24, 2021 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "United States Self-Storage Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)" - https://www.reportlinker.com/p06184963/?utm_source=GNW
Self-storage is one of the most resilient asset classes in the market, in part as the number of people using storage continues to rise, and the unique fundamentals of operating the business make it attractive. The industry has been growing in recent years. According to the US Census Bureau, construction spending on self-storage has increased by 584% from January 2015 to January 2020.
Further, the demand has increased owing to the pandemic and its impacts. The advantages in the self-storage market include increased household penetration, strong population growth in the United States, and the sector’s resilience compared to other asset classes. The self-storage sector is returning to higher levels as states begin to scale back some of their COVID-19 restrictions.
The self-storage industry is a sub-sector of commercial real estate. The growth of the industry is expected to be positive during the forecast period, due to the trends of increased urbanization and improved economic outlook, across regions, which have led to new business growth. Although self-storage facilities are widely available in mature markets, such as the United States and Western Europe, they still remain a relatively new concept in the Asian markets, such as China and India.
The continuing trend in the e-commerce sector, in terms of opening brick and mortar stores for pick-up and delivery, also supports the growth of the self-storage market. The UNCTAD reported increased e-commerce sales, as the value jumped to USD 26.7 trillion in 2019, up by 4% from USD 25.6 trillion in 2018. Thus, an overall surge in online shoppers is likely to boost the market for self-storage systems. The United States alone accounted for USD 791.7 billion in terms of the generation of online retail sales. The dramatic rise in e-commerce amid movement restrictions induced by COVID-19 increased online retail sales’ share of total retail sales from 16% to 19% in 2020, according to estimates in a UNCTAD report published on 3 May.
Along with the rising growth of the e-commerce sector, niche service demands, like climate-controlled environments and specialized spaces for sports equipment, across the country are likely to provide immense growth opportunities to the US self-storage market.
The United States also houses major companies with establishments in the country. This gives a significant boost to market development, which is evident from the presence of players, such as Public Storage, Extraspace Storage Inc., and U-Haul, among others. As per U-Haul’s estimation of the US migration trends in 2020, arrivals of one-way U-Haul trucks in Tennessee recorded the highest migration rates, followed by Texas. Arrivals accounted for 50.6% of all one-way U-Haul traffic in Tennessee, which ranked No. 12 among growth states a year ago.
The structural changes in the retail and office landscape are driving the market for self-storage facilities. Existing failing/abandoned retail facilities are expected to be converted into a space. Such activities are among the recent trends to further drive the market in the country. With the presence of well-established players across the country, such as Public Storage, Extra Space Storage, and U-Haul, some of the new players find it challenging to enter the market space by facing entry barriers from the existing ones. The new entrants might have to incur high marketing expenses, considering that the long-standing players are spending about 20% of their revenues on marketing and increased print advertising.
With the United States is highly regulated by the FDA, in terms of storing perishable products, such as groceries, the capital requirements for setting up or maintaining a cold storage facility may be on the higher end, considering the automation expenses (conveyor belts, automation of truck loading, and building automation). This is suggestive of the dominance of the country due to the growing adoption of advanced technologies across the self-storage market.
Key Market Trends
Increased Urbanization, Coupled With Smaller Living Spaces
Growing urbanization is one of the major factors that are positively driving market growth. Growing urban populations mean smaller and increasingly expensive living spaces in cities and the creation of more renters who move around more frequently.
As people move to live spaces in cities, they have less space for all their possessions. Downsizing to smaller homes in any location also plays a large role in the storage market. Decreasing rural opportunities due to the consolidation of operations is forcing the population to more condensed population densities in cities where the studied market solves a primary problem of space allocation. Self-storage offers a cost-effective and convenient way of freeing up space at home by storing items that one does not have space for.
Due to the rising urban population between 1970-2018, consumer spending on goods and services is facilitating the need for storage spaces. This is evident from the fact that according to the world bank, in 2020, the United States had 82.66% of the population living in urban areas of the city as compared to 81.671% in 2016.
Hence, increased urbanization and rising house prices mean that the living spaces are getting smaller and smaller. This has presented the self-storage vendors in the region with a lucrative opportunity to build such spaces that allow them to store their belongings safely and securely at a cheap price.
As population densities have increased in the United States, there has been an increase in self-storage awareness and development. According to the 2021 Self Storage Almanac, at the end of 2020, there were 48,233 self-storage facilities in the U.S.
Personal End-Users are Expected to Hold the Larger Market Share
Self-storage is commonly associated with personal use as some individuals need temporary space to house some of their essential items. Household items such as furniture, appliances, electronics, dishes, kitchenware, and personal items are among the most common items people place in storage.
Self-storage businesses lease a variety of unit sizes to the residential customer along with the business. According to the 2020 Self Storage Demand Study by Self-Storage Association, nearly 10.6% of all households in the US rent a self-storage unit. The self-storage renter households increased from 11,806,381 in 2017 to 13,495 671 in 2020.
Popular unit sizes (in feet, with width and depth) included 5 feet by 10 feet (20%), 5 feet by 5 feet or smaller (16%), 10 feet by 10 feet (24%), 10 feet by 15 feet (15%), 10 feet by 20 feet (13%), and 10 feet by 30 feet or larger (13%).
The prominent reasons for renting self-storage include moving, downsizing, temporary reasons such as a major remodel to a home, renting the home so one can take a long travel adventure, storing family heirlooms after the loss of older family members, and with the new residential construction in any state region.
There has been a rapid increase in home remodeling in the country, which is expected to create new opportunities for the market. According to the 2021 Houzz & Home Study (based on the survey of 70,000 United States respondents), the number of money people spent on home renovation projects grew 15% in 2020, according to the report, jumping to a median expense of USD 15,000. According to the report, the number of home office projects increased by 4% points in 2020, and people spent 10% more on them compared with the previous year.
Furthermore, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development announced Privately?owned housing starts in September 2021 were at a seasonally adjusted annual rate of 1,555,000.
The competitive rivalry in the United States self-storage market is high owing to the presence of some key players in the region, such as public storage, U-haul International Inc., amongst others. Their ability to continually innovate their offerings has allowed them to gain a competitive advantage over other players. Through research and development, strategic partnerships, and mergers & acquisitions, these players have been instrumental in gaining a stronger footprint in the market.
Sep 2021- StorageMart completed the acquisition deal that adds nine first-class self-storage locations to the company’s growing portfolio in the Milwaukee Metro region. There are 5 664 storage units totaling 712 899 net rentable sq. ft. The new properties were purchased from their previous owners, Storage Masters, and are now managed by StorageMart.
Oct 2021- After acquiring a CubeSmart Self Storage facility in Indianapolis, StorageMart now has a third Indiana location to add to its growing portfolio. This property will receive new lighting and an Open Tech Gate, which will allow renters to gain contactless access to the property via the "StorageMart Unlocked"app.
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