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Patriot's 2 Min Drive: Major Factors Driving Long-Term Storage Demand
The major factors increasing the demand for self storage.
Urbanization & Downsizing:
The trend towards urban living and smaller homes is unmistakable. According to the United Nations, 82% of the U.S. population lives in urban areas as of 2021, and this is expected to reach 87% by 2050. Moreover, the average size of new single-family homes has been decreasing, having peaked at 2,689 sq. ft in 2015 to approximately 2,273 sq. ft in 2021. This has led to a growing need for external storage options as people seek to declutter their living spaces.
The 4 Ds: Death, Divorce, Downsizing, and Dislocation:
These life events generate a need for self-storage. There were approximately 3.27 million deaths in the U.S. in 2022, nearly 700,000 divorces, and an average American moves around 11 times in their life. These circumstances often create a need for temporary storage as individuals navigate through these changes.
Increasing Mobility:
The U.S. has an increasingly mobile workforce. According to a Gallup poll, roughly 43% of employed Americans spent some time working remotely, which often translates into relocation. The U.S. Census Bureau reports that 9.8% of the population moved annually in the pre-COVID era. Self-storage units are crucial for individuals and families during these relocations.
E-Commerce Boom:
E-commerce sales in the U.S. accounted for 14% of all retail sales in 2020, and are expected to reach 23% by 2025. Small businesses and online retailers often lack warehouse space, and self-storage units have become an economical alternative for storing inventory and merchandise.
Real Estate Market Dynamics:
The U.S. real estate market has seen significant fluctuations, with housing prices soaring. According to the National Association of Realtors, the median price for existing homes increased by 23.4% in May 2021 compared to the previous year and a further 10.2% in 2022. As home prices rise, more people turn to renting smaller spaces and using self-storage units for their belongings.
Seasonal Needs & Hobbies:
The U.S. has a diverse climate, and many individuals engage in seasonal hobbies such as skiing, boating, and hiking. The storage of equipment and gear for such activities is driving demand for self-storage units. A Self Storage Association report found that 17% of self-storage renters claim to store seasonal items.
College & University Student Population:
With over 19.7 million students enrolled in U.S. colleges and universities in 2022, there is a high demand for self-storage units. Students often need storage during semester breaks and accommodation changes.
The self-storage industry presents a resilient and growing asset class for investment. At Patriot Holdings, we are poised to capitalize on these dynamics, offering our investors opportunities to tap into the potential that this market holds.
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