Self Storage

Navigating the Growth Waves: Self Storage Industry Insights for 2024

The self-storage industry, a stalwart in the commercial real estate sector, has weathered economic storms, pandemic challenges, and shifting lifestyle trends. As we step into 2024, the landscape of this industry continues to evolve, driven by an array of factors, from housing dynamics to technological advancements.

Market Overview

In 2021, the global self-storage market boasted a valuation of $54 billion, a figure set to surge to $83.6 billion by 2027 with a projected CAGR of 7.53%. The North American market spearheads this growth, contributing significantly to the industry’s upward trajectory. Source: Forge Buildings

Resilience Amid Economic Flux

Even amid economic fluctuations, the demand for self-storage continues to grow, becoming a go-to solution for individuals facing housing challenges and frequent relocations. The market thrives on the escalating cost of housing in densely populated areas and the increasing need for storage space as homeowners and renters acquire more possessions to fill larger homes. 

S3 2024 Development Advice

For those interested in developing storage properties in 2024, the question often arises as to whether now, with rising interest rates, is the right time to invest. In recent months, S3 Partners would describe the storage development landscape as being in a “soft-pause.” This means development and investment are still happening, but not at the quick rate witnessed in 2022 and early 2023. We do not recommend “stepping on the brakes,” the process should be strategic and thoughtfully planned.

A rebound to the sector’s prosperous days is anticipated with the stabilization of interest rates and the restoration of consumer confidence—events that are deemed inevitable. This resurgence is expected to bring back profitability, even in oversaturated markets.

Prospects for 2024

  1. Growth Projections

Investors and entrepreneurs continue to flock to the self-storage sector, driven by its consistent growth. According to YardiMatrix, the industry witnessed a surge, with 14.5 million people utilizing self-storage in 2022, up by 970,000 since 2020. Resilience plays a pivotal role, with the sector thriving in both flourishing and challenging economic conditions, positioning itself well heading into uncertain economic conditions in 2024. 

  1. Regional Growth Areas

According to a Forge Building Company article, 2024 growth hotspots are projected in high-growth metros in the South and West, including Miami, Atlanta, Phoenix, and Tampa. Cities like New York, Houston, San Antonio, and Los Angeles remain in high demand, driven by the preference of the millennial population for urban living and the space constraints in apartment units.

  1. Commercial Usage

Small businesses, especially those in e-commerce, contribute significantly to the demand for self-storage. Renting storage units proves to be a cost-effective alternative to warehouse space, aligning with the needs of businesses for inventory storage or equipment housing. 

Source: IMARC

  1. Northeastern Surge

The Northeastern states, including Delaware, New Jersey, New York, Connecticut, New Hampshire, and Maine, continue to witness a surge in self-storage development. Population growth, coupled with shifting storage needs, propels the demand in these regions. 

Source: IMARC

In 2024, storage investors and developers must be resilient, patient, and adaptable. Interest rates, home buying trends, and evolving work patterns will influence the industry, but we see growth happening, albeit in a slower dynamic than experienced post-COVID. The self-storage sector remains a compelling investment and integral to modern living.