Economics & Demographics • Section 2 F
ive years after the Great Recession officially ended, eco- nomic uncertainty crept into the minds of many Ameri- cans as 2014 neared an end. Granted, on the whole, 2014 had more than its share of good economic news: The unem- ployment rate fell below 6 percent; the stock market reached all-time highs; borrowing rates remained near historic lows; oil prices were on the decline; and wages were on the rise. But the stock market sputtered at the beginning of the fourth
quarter as fears of an Ebola epidemic and other world events created scary headlines. In addition, the Federal Reserve’s deci- sion to curtail its aggressive bond-buying program in the fourth quarter raised concerns about the prospects of rising interest rates and inflation entering 2015. The Fed’s quantitative easing program is credited with pushing mortgage rates to historic lows and reviving the housing market.
Construction of new inventory remains limited
in most markets, however, storage demand has grown significantly. Economic growth and
household formations are among the factors contributing to a strong storage market.
Despite favorable economic conditions, consumers could
not shake off nagging doubts about the overall health of the economy. Nevertheless, signs of positive growth were present as we entered the new year. Real gross domestic product (GDP) for the second quarter of 2014 increased at an annual rate of 4.6 percent, rebounding from a startling first quarter decline of 2.1 percent. Many economists were optimistic that GDP would hit 3 percent in 2015.
Economic And Self-Storage Demand Trends In the post-recession recovery, demand for self-storage has picked up as the job market has improved. With little new
construction from 2008 to 2012, existing self-storage units have filled up, enabling facility owners to raise rents, to record levels in many locations. Construction of new inventory remains limited in most
markets, however, storage demand has grown significantly. Economic growth and household formations are among the fac- tors contributing to a strong storage market. The unemployment rate declined to 5.9 percent in Septem-
ber 2014, compared with 7.2 percent a year earlier, according to the U.S. Bureau of Labor Statistics. Over the year, the number of unemployed persons was down by 1.9 million workers. The im- proving job picture allowed the country to regain all 8.7 million jobs lost during the recession by May. Wages were finally on the rise in 2014, meaning more con-
sumers could afford self-storage. The average hourly wage for all employees on private non-farm payrolls was $24.53, an in- crease of 2 percent year-over-year. A gradual housing recovery along with exceedingly strong apartment occupancy also may have contributed to a need for self-storage. The steady employment growth and subsequent confidence
in the strength of the economy led to the creation of one mil- lion households in 2013. With rising immigration factored in, this level approached 1.25 million new households in 2014—a level not reached since the late 1990s. Job growth combined with new household formations and
increasing population mobility lift demand for self-storage units nationwide. Marcus & Millichap, a real estate brokerage firm, has identified key areas of the country where demand potential is greatest: On the East Coast, migration is stimulated by above-average
employment markets, including New York City and Charlotte, N.C. These traditional financial centers are diversifying with technology and housing-related segments, adding thousands of positions that are attracting job seekers from outside the im- mediate areas. In energy states such as Texas and Oklahoma, oil and gas exploration has spurred thousands of new high-wage jobs that
Chart 2.1 – U.S. Unemployment (2010 -2014)
10 12
0 2 4 6 8
Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 2015 Self-Storage Almanac 39
Percentage
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