Self-Storage Supply & Demand • Section 10


cession, the low capital requirements and strong balance sheets have enabled consistent growth over the years. The success has sanctioned the sector’s self-designated dubbing as “the best real estate asset in the United States”.


O


Currently, the industry is focusing on navigating through one of the largest oversupply periods in its history. To better understand how to navigate the cycle, we reflect on the drivers of demand and drivers of supply, and how as an industry we should continue to evolve our thinking to become more efficient op- erators and participants.


According to our analysis, population growth has no


correlation to revenue growth. In other words, we’ve found evidence that, even when a population declines, some areas still experience a


steady increase in revenue.


Self-Storage Demand What drives self-storage demand? The answer we hear most often is population growth.


First, what is population growth? Population growth


is mostly a function of birth rates and death rates. But will an increase in the birth rate, or decrease in the death rate, benefit the self-storage industry? Here’s what the numbers say.


According to our analysis, population growth has no


correlation to revenue growth. In other words, we’ve found evidence that, even when a population declines, some areas still experience a steady increase in rev- enue. Now, we acknowledge that, if the population shrinks by two percent every year, it will likely create problems for the self-storage facilities operating in the area. However, just because a population is growing at one percent, it doesn’t mean there’s an all-clear for self- storage demand.


If population growth isn’t a clear driver of self- storage demand, what is?


2018 Self-Storage Almanac 111


ver the last decade, the self-storage industry has de- livered an impressive four percent revenue compound annual growth rate. Although not immune to the re-


Migration According to a survey issued by SpareFoot in 2014 that reached 12,000 self-storage customers, migration is the key to self-storage demand.


The study showed that 68 percent of demand revolves around “life events”. These events result in a change of resi- dence, i.e. migration, while the other 32 percent store “extra things”. However, to understand how migration drives de- mand, let’s first narrow down what migration means.


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