Americans love stuff! From Spring through Fall, our neighborhood is peppered with garage and estate sales, and folks start showing up two hours before the sale just so they can add more trash (or treasure) to their households. And it makes no difference if they have room to store all that stuff, because if they don’t, they’ll just rent a storage unit!
I know several people who moved to my area as long as 10 years ago who rent three or four storage units that they haven’t visited—much less cleaned out—since the moving truck deposited their overflow of goods in their units.
But these folks are far from alone. Twenty years ago, 1 in 17 Americans had a self-storage unit. Today, that number is about 1 in 10. I guess that explains why there are now more than 52,000 units in the U.S. serving both personal and small business needs. And, in case you think we are the only hoarders, the rest of the world is getting onboard too, with another 10,000 units—3,000 of which are in Canada and more than 1,000 in Australia.
It took more than 25 years for the self-storage industry to reach a billion square feet of space, but it built the next billion in just seven years, from 1998-2005. Today, the industry has more than 78 square miles of self-storage space—more than three times the size of Manhattan!
The self-storage sector has been the darling of the Real Estate Investment Industry for many years, for several reasons:
- It’s been the fastest-growing segment of the commercial real estate industry for 40 years.
- The sector is considered ‘recession-resistant,’ and had a fine showing in 2008 when industry stocks returned 5% according to NAREIT (National Association of REITs, while equities in the S&P 500 lost 37%. And when the broad index gained just 2.1% in 2011, self-storage REIT stocks were up more than 35%.
- Self-storage facilities require little investment, and upkeep is minimal.
- Demographics are in its favor. As baby boomers retire and downsize, we can expect continued growth in storage facilities.
- The industry has begun to see consolidation. The 50,000 or so facilities currently in operation are spread across 35,000 owners
And that spells opportunity for companies like our Spotlight Stock, Iron Mountain Incorporated (IRM). The company is participating in the consolidation of the industry, having recently acquired Recall, a global storage provider. And with industry revenue forecast to grow 15.6% and the number of facilities to more than 60,000 over the next five years (according to IBISWorld), Iron Mountain should have ample opportunity to shine.