SELF STORAGE

Industry Overview

• In the U.S., there are approximately 53,000 self storage facilities, totaling 2.2 billion square feet, with an approximate value per s.f. of $90, resulting in a total market value of approximately $200 billion.
  
• Long-term demand driven by six key factors: Population growth; percentage of renter-occupied housing; average household size; household income; supply constraints; and economic growth.
  
• This niche sector is similar to apartment demand drivers, lease terms, and operating leverage, while cap rates for self storage exceed that for apartments.
  
• Awareness and acceptance of self storage as a consumer service has been increasing.
  
• Supply growth, as measured by both units and square feet, has been significant over the last few years, but most markets are in balance with demand.
  
• Industry occupancy approximates 85 percent, which is at approximately the same level for the last 15 years, demonstrating that demand growth has kept up with supply growth.
  
• Using 10’ x 10’ units as a proxy for the industry, rental rates have increased 7.8% from 1991 ($51.13 per month) through 2000 ($55.10 per month), while from 1991 through 2004, rental rates increased 3.7%. Growth from 2000 ($55.10 per month) to 2004 ($79.87 per month) was 45%. Moderate rental increases are expected in the short term.
  
• Tenants fall into four main categories with the industry composition shown:
  Residential – 75%; commercial- 20%; student-3%; and military-2%.
  
• Average lease term for residential and commercial segments approximates 12 months and 24 months, respectively.
  
• Attributes for location are similar to the retail sector. Drive-by visibility, traffic count, and convenience are important to individual properties.