As more companies search for methods to increase their return on investment (ROI), the self-storage sector keeps expanding rapidly. According to Precedence Research, the global self-storage market is expected to reach over $107.36 billion by 2034. This means that it will grow at a CAGR of 5.91% by 2034. The North American self-storage market alone was worth $27.37 billion in 2023.
Demand is still robust, but many operators ignore the possibilities of less visible markets in favor of fiercely competitive metropolitan locations. Reaching out to untapped or specialized markets might open up many possibilities for increasing revenue.
Here’s how self-storage companies may take advantage of these marketplaces to increase their return on investment.
Targeting Small Businesses and Entrepreneurs
Entrepreneurs, freelancers, and small enterprises are expanding markets that frequently need storage solutions for supplies, equipment, inventory, and even documents. Many small firms use home offices or tiny commercial locations since traditional office spaces can be costly. Due to this, there is a need for reasonably priced storage that makes business-related goods easily accessible.
As stated in a BBC article, one of the biggest reasons behind the worldwide self-storage boom is their use by businesses. In fact, around 70% of self-storage units could be rented by businesses and not individual consumers. This is primarily because of the difference in the rent of a commercial space and that of a self-storage. For instance, business space was around C$60 for every foot in Canada, while self-storage rent was only C$30.
Self-storage businesses can do the following to appeal to this market:
- Provide adjustable lease periods to suit different company sizes
- Offer climate-controlled spaces for goods or delicate equipment
- Market to companies that want more space as the seasons change
Serving Rural and Suburban Communities
Due to their increased population density, storage facilities are more common in urban areas. Rural and suburban areas, nevertheless, frequently offer unrealized potential. Many rural houses and companies have storage needs that are sometimes disregarded, even though these places may have smaller populations.
There is a demand for storage solutions for vehicles, equipment, etc., since residents in these locations are more likely to possess larger homes and cars. For example, a Slate article discusses the story of how a 64-year-old woman had stored several things in her self-storage space, including:
- Her mother’s painting
- A broken frame
- Charred pots and pans
- Tank tops, etc.
She had a unit in a self-storage facility in Washington State, just five miles from the US-Canada border. Although a remote location, the self-storage spaces were filled with boxes stacked as high as 14 feet.
However, this does not mean that you can simply open a self-storage facility anywhere and expect to earn profits. You still need to do thorough market research and understand the location and population before starting your business. One simple way to do this is by conducting a self-storage demand study.
According to Self Storage 101, a self-storage demand study is a comprehensive analysis to assess the viability and possible success of the project. It offers a thorough grasp of the market dynamics, demand drivers, and financial issues, going beyond superficial evaluations.
A self-storage demand study will give you insights into demographics analysis, competitor analysis, market rates and demand calculations, financial analysis, etc. Having all this information with you can help make an informed decision. Thus, you will have a better understanding of how to operate your self-storage business to ensure optimal revenue.
Providing Seasonal and Event-Based Storage Solutions
Offering storage solutions depending on events or seasons is another underused opportunity. Temporary storage is frequently required by both individuals and businesses for seasonal inventory, event supplies, and holiday decorations. Self-storage providers may capitalize on this varying demand all year long by providing flexible, short-term storage.
In order to appeal to this market:
- Create holiday-themed promos, including exclusive prices for storing decorations.
- Businesses that want room to handle spikes in seasonal inventory should consider market storage.
- Provide event coordinators who want storage for goods in between events with short-term contracts.
Catering to the Growing Remote Workforce
Many individuals are turning portions of their living areas into offices as a result of the move toward remote employment. A Pew Research Center study shows that around one-third of Americans who can work from home always do so. Moreover, some 41% are working in a hybrid model, where they go to the office some days and work from home on other days.
Due to this, there is a need for more storage space, particularly for those who must clean out rooms for work. Offsite storage for non-essential or seldom-used things may become necessary for those who work from home. This is because they can no longer afford to maintain everything in one location.
Frequently Asked Questions
What are the things to consider before entering a market that isn’t being fully utilized?
When investigating new markets, consider elements including local storage demand, rivalry, real estate costs, and the particular storage requirements of the local populace. It’s also critical to examine the region’s demographic patterns and economic stability to guarantee long-term survival.
In a congested market, how can self-storage companies set themselves apart from rivals?
Offering distinctive features like cutting-edge security systems, round-the-clock access, climate-controlled units, etc., will help you stand out. Another way to differentiate a facility is to emphasize customer service, convenience, and flexible rental terms. The point is that you should offer something unique to stand out from the competition and attract more customers.
How do companies that provide self-storage evaluate the risk of entering a new or specialized market?
To assess risk, in-depth market research, including comprehending local demographics, the state of the economy, and the competition, is necessary. Financial modeling and feasibility studies can be used to forecast the likelihood of profitability and growth. Having backup plans in place, including methods for handling lower-than-anticipated demand, is also important.
By locating and using underused markets, self-storage companies may increase return on investment. Whether focusing on distant workers, small companies, rural towns, etc., there are many opportunities in sectors that rivals would pass by. In addition to satisfying these specialized demands, self-storage operators may raise occupancy rates and overall profitability by providing customized solutions and flexible leasing.
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