Quality Business Plan has asked our business plan writers and business plan consults to research the recent market trends in self-storage businesses. Our findings were surprising and should be helpful to entrepreneur seeking to write a business plan for a startup self-storage operation or to grow a currently established self-storage business.
Recent Trends for the Self-Storage Business
Self-storage has been a growing phenomenon for the last decade. In 2004, self-storage had revenues of a little over $1 billion. In 2010, the self-storage industry fell to approximately $400 million in revenues. However, in 2011, the industry has bounced back and now has revenues in excess of $3.7 billion.
There are specific reasons for the rejuvenation of self-storage units. First, a main reason for industry revenue fall in the early part of the 21st-century was because of the great recession. This hypothesis is supported because revenues significantly bounce back after 2011, which was the starting point for our current economic expansion. A second reason for the rejuvenation of the industry is that owners have expanded their operations to include RV parking, boat parking and extra vehicle parking. By expanding services, their client base expanded significantly.
Self-Storage Industry Statistics
- As of 2016, self-storage industry Square footage exceeded 2.3 billion.
- Almost 10% of households currently use self-storage facilities.
- Average cost of a self-storage unit is slightly higher than $90 per month.
- Low startup cost and maintenance are popular reasons for starting the set of business.
- Industry growth has not kept up with customer demand. This may significantly drive up prices for storage units in the short to medium term.
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Popular Areas to Start a Self-Storage Business
- Charlette, NC.
- Washington, DC.
- Baltimore, MD.
- New York City, NY.
- Boston, MA.
- Philadelphia, PA.
- San Diego, CA.
- Orlando, FL.
- Miami, FL.
- Tampa, FL.
- Jacksonville, FL.
- Atlanta, GA.
- Raleigh, NC.
- San Jose, CA.
- Houston, TX.
- Dallas/Fort Worth, TX.
- San Antonio, TX.
- Los Angeles, CA.
- San Fransisco, CA.
- Chicago, IL.
- Phoenix, AZ.
Possible Growth Areas for Self-Storage Businesses
Self-storage business in New York City:
New York City, New York has a multitude of self-storage units. At last count, just the New York City area has over 20 different self-storage units. The low number of self-storage units in the city of itself does not mean that the demand is not there. This just shows that property values in the New York City area are incredibly expensive. From this, small business owners seeking to start a self-storage business in the New York City area should explore locations outside of the city. From this, the organization should partner with a moving business to assist New York City residents in transferring inventory or excess stuff to their facility.
Self-storage business in Orlando, Florida:
A quick Google search shows that there are approximately 25 self-storage units in the Orlando, Florida area. The self-storage units are often located near I4, which travels north to south in this stretch of road. The strategy makes sense because self-storage users are easily able to access the facilities off of the interstate. However, market opportunities exist for local residents to the northeast and southwest of the city. Specifically, self-storage businesses may find high demand in the MetroWest and Baldwin Park areas.
Self-storage business in Miami, Florida:
The Miami, Florida area has approximately 30 self-storage areas. Most of the self-storage areas are compiled near Interstate 95. Again, this does make sense. Easy access off the interstate is a critical selling factor for customers. However, due to the size of Miami, there are several interstates the flow through the city such as Interstate 75 and Interstate 595. From this, small storage business owners may be able to identify relatively low-priced properties just outside of Miami to help local populations with their storage needs.
Self-storage business in Chicago, Illinois:
Self-storage units in that Chicago, Illinois area are relatively infrequent as compared to other metropolitan areas. Again, a quick Google search shows that there are approximately 18 self-storage areas in the greater Chicago area. Most of the self-storage areas are concentrated near the shores Lake Michigan. This phenomenon allows new entrants the possibility of exploiting market opportunities closer inland. Further, this action will allow startups to exploit major interstates such as 90 and 294 as well.
Self-storage business in Houston, Texas:
The Houston, Texas area has well over 30 self-storage facilities. However, just about all the self-storage facilities are located either in central Houston or to the west of the city. Because of this, new entrants into the self-storage industry may find ample markets to the east and southeast of the city. Further, easy access from Interstate 45 and Interstate 610 is also a good selling point.
Self-storage business in Los Angeles, California:
Google shows that there are approximately 18 self-storage units in the greater Los Angeles area. A driving reason for the low number of storage units would be the price of land in the area. Again, this issue may be mitigated through teaming up with a moving company. For example, if a business owner chooses to start a self-storage unit in the Santa Monica area, then they may also start a moving company business. By having a moving truck, this will keep residents from needing to travel to their facility. This way, the organization is able to market their facility to a larger audience due to the people’s need to not visit the facility.
Keys to Success in the Self-Storage Business Industry.
- Maintain low overhead. Self-storage businesses should maintain low overhead costs. By keeping overhead costs low, small business owners are able to achieve disproportionately large net profits.
- Business location. Self-storage businesses often do best near colleges, large housing developments and office complexes.
- Exploit economies of scale. Because of ability for a company to have low overhead, economies of scale are critical to achieve maximum profits. In other words, the larger the facility the better.
The Future for the Self-Storage Industry.
The future of the self-storage industry looks bright. Not only does this industry service a wide range of customers, such as families, business owners and college students, the industry will also be helping baby boomers as they retire. As people retire, they tend to sell their family home and move into smaller living arrangements. However, due to sentimental value, baby boomers’ frown upon separating with family heirlooms. From this, as baby boomers continue to retire, the need for self-storage will continue to grow.