Understanding Demand in the Self-Storage Industry: A Storage Sense Check

Remember back in 2021 and 2022 when self-storage facilities were like the hottest ticket in town, with occupancy rates soaring to a whopping 92%? Fast forward to Q2 2024, and we’re back to more “normal” levels—hovering around 85%. But before we collectively panic, let’s dig into why this shift is happening and how you can keep your facility rolling smoothly in this unpredictable market.

The following insights and strategies were derived from our recent how-to guide: Guide to Driving Demand. To unlock the full picture, click below. 

Guide to Driving Demand | Understanding Demand in Self-Storage

Supply and Demand: The Macro-Economy

Here’s the dynamic—when supply outstrips demand, you end up with more empty units. During the pandemic self-storage boom, construction skyrocketed which left us with an excessive amount of storage units. This increase in demand was due to the active housing market and people migrating out of cities. Fast forward— now we’re looking at a bit of an oversupply issue.

SpareFoot recently reported a jaw-dropping 584% increase in construction spending on self-storage over five years—that’s not a typo! And now, with the housing market and the economy doing a slow dance, demand has taken a bit of a nosedive.

The Search for Space: Fewer Clicks, More Tricks

When it comes to online search trends, google keywords like “storage near me” are getting about half the traffic they did back in 2021. 

A quick glance at Google Trends shows a dip in search volume—so, while your storage facility might have all the bells and whistles, attracting potential renters might feel like trying to find a needle in a haystack. Now is the perfect time to crank up the competitive edge and make your facility stand out using organic and paid marketing strategies.

Housing Market Hiccups

High interest rates are causing a bit of a hiccup in the housing market, making mortgages more expensive and slowing down home purchases. According to a Cushman & Wakefield study, a whopping 75% of self-storage tenants are homeowners. Fewer home sales mean fewer people moving and needing storage.

And, let’s not forget the rising rental rates. A Storable report points out that nearly 40% of storage renters need space for a move, but with rental costs climbing, folks are less inclined to pack up and move. High inflation is also squeezing wallets… The good news? Inflation is slowing a bit, so hang tight—there’s hope on the horizon.

The Great Self-Storage Migration

Here’s where things get interesting. Just as people are moving out of big cities and into the suburbs or warmer states, the demand for self-storage is shifting. Cities like New York and California are seeing people move out in droves, while places like Texas and Florida are experiencing a storage surge. As a self-storage operator, you need to stay on top of these moves to future-proof your facility for success.

In fact, Knoxville, TN, is showing off its fastest-growing storage market status! Understanding these local migration patterns can help you adjust your strategy and stay ahead of the curve.

Conclusion: Keeping Your Storage Strategy in Check

To wrap it all up, the self-storage market is a bit like a roller coaster right now—ups and downs, highs and lows. Staying on top of market trends, understanding the shifts in demand, and adapting to local changes can make all the difference. Whether you’re dealing with a sudden surge in supply or navigating through lower demand, keeping your finger on the pulse and being proactive will help you keep your storage facility thriving.

Keep your operations organized, your pricing competitive, and your features top-notch. Together, we can stay ahead in the game and ensure your facility stays the go-to spot for all things storage! 

Download Now – Guide to Driving Demand | Understanding Demand in Self-Storage