According to the Self Storage Association, an estimated 11–13% of U.S. households now rent self-storage, up from roughly one in ten households several years ago, reflecting steady demand growth from factors such as urbanization and downsizing. Self-storage facilities have become increasingly popular in recent years due to the growth of the sharing economy, urbanization, and downsizing. Industry research from the Self indicates that the global self-storage market is currently around the low‑60‑billion‑dollar range and is projected to grow into roughly the mid-80 to low-100-billion-dollar range over the next decade, implying mid‑single‑digit annual growth.
Key Takeaways
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While revenue in the self-storage industry can fluctuate based on economic and market conditions, the sector has demonstrated consistent growth over the past five years, reinforcing its appeal to investors. According to data from the National Association of Real Estate Investment Trusts (Nareit), self-storage REITs have maintained steady revenue and total-return performance over multiple cycles. From 2016 to 2020, the sector delivered total returns of 18.45%, 9.04%, 4.20%, 18.32%, and 5.15%, respectively, reflecting durable cash-flow fundamentals even through shifting macroeconomic environments. Following strong post-pandemic performance and a recent period of moderation as interest rates and fundamentals normalize, many investors continue to view self-storage as a compelling asset class with attractive long-term, cycle-averaged risk-adjusted returns.
Before investing in self-storage, it is essential to develop a thorough understanding of the market, including demand drivers, competitive supply, and location-specific dynamics. Key trends such as urbanization, downsizing, and the rise of e-commerce continue to support demand for storage space across major U.S. markets. Investors should also evaluate local market conditions—such as population growth, income levels, and housing trends—to identify locations with strong potential for sustained self-storage demand.
What Factors Make Self-Storage a Strong Investment?
Self Storage Is Always In Demand:
Self-storage performs consistently across economic cycles, with strong demand during both expansion and contraction periods. In growth environments, households move more frequently or take extended travel, increasing short-term storage needs. During downturns, trends such as downsizing, temporary relocation, or returning to school often drive additional storage demand. Construction lag times have limited new development, creating undersupplied markets, particularly across the Southeast.
ROI Is More Straightforward:
Self-storage assets offer simplified operations, reducing the hands-on challenges typical of other commercial real estate property types. Owners and managers avoid urgent, repair-driven tenant issues, which helps streamline oversight and stabilize projected returns.
Low Expenses:
Capital expenditures for self-storage facilities are generally low relative to other investment property classes. Lower ongoing expenses support steady cash flow even as broader market dynamics shift.
Financing For Self Storage Investment Properties Is Accessible:
Lenders view self-storage as a resilient asset class, reinforced by its performance during the COVID-era volatility, which has increased their appetite for financing. Investors entering or expanding within the sector can typically secure competitive loan terms with relative ease.
Self Storage Properties Provide A Reliable Stream Of Income:
Self-storage facilities often include hundreds of individually leased units, reducing reliance on any single tenant. As a result, vacancy from one or two units has minimal impact on overall cash flow. Strong demand facilitates rapid backfill of vacant units, supporting income consistency.
Self Storage Rent Increases Have Less Pushback:
Many self-storage tenants occupy units on month-to-month leases, enabling owners to adjust rental rates more frequently. Shorter lease terms typically lead to less resistance to rate changes, allowing pricing to keep pace with market conditions. This flexibility helps maintain stable income even when tenant turnover is higher.
Storage Unit Investment Compared to Traditional Real Estate
When evaluating storage facilities alongside other commercial real estate assets, investors often focus on the sector’s consistent cash flow and resilience across economic cycles. Storage properties have historically performed well in both expansionary and contractionary environments, supported by diverse demand drivers that range from household transitions to small business inventory needs. Unlike many traditional commercial real estate categories that rely heavily on tenant credit quality or long-term lease structures, storage income is generated from a broad and varied tenant base, which helps distribute risk and limit exposure to any single occupant. This combination of durability, flexible leasing, and predictable occupancy trends positions storage as an attractive option for investors seeking to balance their portfolios with an asset class that performs reliably through changing market conditions.
Pros and Cons of Investing in Storage Units
Pros |
Cons |
| Steady demand supported by life transitions and recession-resistant usage patterns | High initial capital requirements may limit accessibility for new investors |
| Minimal ongoing maintenance due to simple unit construction and limited building systems | Market saturation in certain areas can reduce occupancy and pressure rental rates |
| Scalable operations with opportunities to enhance revenue through added services or climate-controlled units | Zoning restrictions and regulatory requirements may delay development or limit expansion |
| Stable cash flow potential supported by broad tenant bases rather than single-tenant dependency | Environmental considerations, such as stormwater management, may increase operational complexity |
Types of Storage Unit Investments
Investors can participate in the storage sector through several structures, each offering a different balance of capital commitment, operational responsibility, and return potential. Understanding these approaches helps identify which strategy best aligns with your broader investment goals and portfolio strategy.
Facility Ownership:
Owning a storage facility directly is the most operationally involved structure, giving investors full control over property performance, pricing, and long-term strategy. This approach may include acquiring an existing facility or developing a new site in a market supported by strong demand drivers. Although ownership requires attention to daily operations, many investors partner with third-party management firms to oversee marketing, customer service, and maintenance. This model tends to appeal to investors seeking full real estate ownership with the ability to influence net operating income through strategic improvements and active oversight.
Storage Focused REITs:
Storage REITs provide exposure to the asset class without requiring investors to manage individual properties. These publicly traded companies own and operate large, diversified portfolios and offer liquidity alongside regular dividend distributions. REITs generally require lower upfront capital and allow for easy entry, making them suitable for investors who prefer a passive, market-driven approach. Because REIT shares trade on public exchanges, investor returns may be influenced by broader equity market trends in addition to property-level fundamentals.
Investing In Individual Storage Units:
In select markets, investors can purchase single storage units within larger facilities, similar to acquiring commercial condominium space. This structure allows participation in rental income at a smaller capital scale while relying on facility-wide management for operations. Although this approach provides a simplified entry point, it generally offers limited influence over property strategy and may produce more modest returns due to shared management costs and reduced scalability.
What Factors Determine Self-Storage Investment Success?
Self-storage assets perform best when supported by strong market fundamentals, efficient operations, and a property design that aligns with local demand. Understanding these elements helps investors assess whether a facility is positioned for long-term stability and consistent occupancy. Many of these fundamentals align with broader self-storage investing strategies that can further strengthen an investor’s decision-making process. The key factors below play an important role in evaluating the potential of a self-storage opportunity.
Location:
Strong locations for self-storage facilities typically offer high visibility, convenient access, and population growth that supports sustained demand. Proximity to residential neighborhoods, apartment communities, and local businesses enhances customer acquisition potential. Most customers will come from within a one to five-mile radius of the facility, making surrounding demographics and growth trends essential considerations. Evaluating whether the area is expanding or contracting can help determine future demand and long-term positioning. Smaller home and apartment sizes in the local market often signal a greater need for additional storage capacity, supporting more consistent occupancy.
Size:
Self-storage facilities commonly range from ten thousand to one hundred thousand square feet, with average rentable square footage around forty-six thousand square feet. A facility typically occupies two and one-half to five acres of land, depending on design and layout. The size of the facility influences key considerations, including maintenance expenses, property taxes, staffing requirements, and overall operational complexity.
Demand:
Metrics such as square feet per capita and price per square foot help evaluate supply and demand dynamics within a market. High square footage per capita may indicate oversupply, while lower levels often point to unmet demand. Strong pricing across comparable facilities is another indicator of healthy market demand and limited competitive pressure.
Consumer Behaviors:
Offering a variety of storage solutions can attract a broader tenant base and support consistent occupancy levels. Climate-controlled units, vehicle storage, and specialized options for items such as wine, artwork, or documents can expand the facility’s appeal. Evolving consumer trends, including increased activity in e-commerce and online marketplaces, continue to influence demand for additional storage space.
Management:
Determining whether the property is owner-managed or supported by a third-party operator is essential for evaluating operational efficiency. Investors should consider whether they plan to self-manage or outsource functions such as customer service, maintenance, and daily operations. Effective digital marketing, including search engine optimization, paid advertising, and social media outreach, can significantly increase tenant acquisition. A strong management system with responsive customer service, routine maintenance, and efficient billing contributes to tenant satisfaction and operational stability.
Occupancy Rates:
Occupancy levels in the ninety to one hundred percent range typically signal strong demand in the local market. Low vacancy rates provide confidence that new or existing facilities will continue to attract tenants consistently. When acquiring a facility, high current occupancy is often an important indicator of long-term performance potential.
Consult An Expert
When you are ready to discuss a self-storage investment strategy, the team at Sands Investment Group can provide informed guidance and market insight. Our advisors have facilitated transactions involving self-storage facilities across the country, helping investors identify the right opportunities and secure favorable outcomes when expanding their portfolios.
Self-storage can offer stable cash flow and portfolio diversification for investors seeking a resilient real estate asset class. By understanding market fundamentals, selecting an appropriate location, diversifying unit offerings, implementing technology and security enhancements, and prioritizing customer service, investors can strengthen performance and differentiate their facilities in competitive markets. To evaluate your next step or explore available opportunities, consult an advisor at Sands Investment Group today.
