Introduction…Investors in London’s premium real estate know their tenants are among the world’s wealthiest and most stable. Schroder Plc has $3 billion worth of property with these most stable tenants.
But, in the era of Brexit, the market can change. That’s one reason Schroder is the largest self-storage company in UK with 109 stores in 45 cities.
Demographic logic…What storage lacks in cachet, it makes up in demographic logic. Downsizing retirees and growing ranks of home renters in London are creating what Schroders and other real estate investors see as a Brexit-proof and recession-proof opportunity.
In the U.S., growth has been pretty amazing. Today there are 54,000 self-storage facilities in the United States, which is 90% of the global storage industry. Those sites hold 2.63 billion square feet.
Storage beats Hollywood…All that space is sold in small increments generating $32.7 billion in revenues. Last year that was three times Hollywood’s box office gross. In most cases, self-storage is far more profitable than other conventional real estate. As an example, in 2016 self-storage rented for 97 cents per square foot in Phoenix which was similar to the average one-bedroom apartment. In larger cities, storage can rent for two to three times higher rates.
Growth factors…Americans are relentlesss at accumulating consumer goods. From 1967 to 2017, expenditures for durable goods – like furniture, bikes, electronics, clothes, books – increased almost 20 times. As a result, Americans have run out of room for their stuff.
The industry also thrives on disruption to our lives. It serves as a temporary resting place for stuff of the dead, divorced, downsizes, and dislocated.
In conclusion..These trends are driving investments in a sector that most real-estate investors barely notice. And in uncertain times, self-storage looks like a place to stash money.
The near term opportunities in self-storage are exciting. Be sure to stay tuned. If you are not a subscriber to this newsletter, do so in the upper right of this page or go to self-storageinsider.com for your FREE subscription.