When to Invest in Self Storage?

Investing in self-storage can be a lucrative opportunity, but the key to success is knowing when to dive in, what to expect, and how to work with a qualified team of self-storage consultants.

A lot of folks have been asking us questions about interest rates lately and if it’s a good time to invest in self storage. While that’s an important detail to consider, it’s by no means the only factor that should determine your go, no-go investment decision.

As such, we wanted to put some of our leading industry insights down on paper for you so that you can have confidence when deploying an investment strategy in self-storage development. Scroll on for more information about how to invest in self-storage successfully.

Current Real Estate Investing Trends and Insights

The self-storage sector continues to gain prominence in the commercial real estate landscape. As of 2024, the overall occupancy rate for stabilized facilities stands strong at 83.85%, indicating a steady demand for storage units.

A lot of people come in hot, taking only square feet per capita as an indicator for a successful self-storage investment. But here at StorageStudy, we know that to be pretty useless and a very dated way of looking at things.

Our self-storage feasibility studies are your first line of defense in determining investment quality and potential. We take many things into consideration, such as occupancy and rental rates. But when performing due diligence, it also helps to zoom out and take a broader look at community development, too.

As a case in point, let’s take a look at self-storage development in Florida. Sure, in our post-COVID world, materials are more and interest rates are higher, but when you consider the sheer volume of community development going on, that’s a lot of people on the move who will need storage units to accommodate furniture, an extra vehicle such as an RV or boat, office supplies, inventory for new work-from-home businesses and so much more.

If you make the mistake of letting interest rates act as blinders, your dreams of owning a great commercial property that produces passive income will pass you by.

Let’s look into that a little more in the next section.

Economic Conditions and Interest Rates

One of the biggest factors affecting self-storage investments is the economic climate. Higher interest rates can be a deterrent for many investors, but it’s crucial to view them in a historical context. Even with recent increases, today’s interest rates are still relatively low compared to historical averages. This means financing a self-storage project can still be quite affordable, making now a potentially good time to invest.

If you want to dig deeper into a construction loan, we’ll take you through. The team at StorageStudy has been investors, lenders, owners, and operators, too. We know what your concerns are, and we can show you how to make the most of this type of real estate investment.

Don’t Underestimate the Resilience of Self-Storage

The self-storage industry has proven to be resilient, even during economic downturns and times of recession (and maybe especially then). For instance, the sector showed robust performance during the COVID-19 pandemic, driven by increased demand from people needing to store belongings due to life changes such as moving or downsizing.

Private Operators Like You vs. Big Players

StorageStudy believes that private operators like you can compete with industry giants by focusing on exceptional customer service and innovative features. At ProSafe Storage (one of our latest self-storage development projects), we offer a free move-in truck and a climate-controlled drive-through area to enhance the customer experience. These features not only attract tenants but also create a loyal customer base.

When was the last time you saw a free moving truck at any of the known major chains?

Yeah.

Us too.

They make bean-counter decisions at the enterprise level.

Your return on investment will come from taking the opposite approach when you create storage facilities that have the latest technology, accessibility options, surveillance and security features, and more. You might think this is an extra expense, but put yourself in the shoes of your customer.

Wouldn’t you pay more to protect your belongings in a place that felt modern, clean, and useful? You have the ability to zig while the industry big boys zag. And when it comes to your profit margin, you’ll have a space that folks love renting month over month and year after year.

Ok. But How Much Does it Cost to Invest in Storage Units?

Building a quality self-storage facility can cost anywhere from $1M to $15M. The types of storage facilities we create have 200 units or more. When you work with us, we take due diligence seriously because, as you can see, these are big numbers. We want to make sure your self-storage investment is going to be a profitable one, and we dig deep to make sure you understand everything from site selection, pro forma, and what your return on investment might be (and the timetable for that, too).

Also, the thinking, “If we build it, they will come,” is not enough.

We’ll show you how to integrate a marketing plan into your budget and how to find, hire, and keep the right property manager. A self-storage facility property manager is about as critical as the facility itself, and you can check out this video to see what we mean.

Why Now Might Be the Right Time to Invest in Self Storage

Check out this case study which illustrates one of our project and their projected return.

There’s way more to learning how to invest in self-storage than just looking at interest rates on a construction loan. In fact, if that’s the only detail you’re considering, this commercial real estate investment might not be the right one for you.

But if you’ve got the chops to see the big picture, StorageStudy’s self-storage consulting group can help you win.

Given the current market conditions, economic factors, and the resilience of the self-storage sector, now could be an excellent time to invest. Whether you’re looking to develop a new facility or acquire an existing one, the potential for growth and profitability remains strong.