It is a simple principle: the need for storage grows as people downsize their home or office, or move to more crowded metro areas with smaller apartments. How does that translate into a good investment?
For one, self storage facilities are not as vulnerable to market volatility as other properties, what is often referred to as a “recession-proof” investment. In fact, self storage performs well during times of economic downturn, as people downsize their homes and store extra items in a self storage facility. Self storage was the only REIT sector to report positive total returns during the 2008 financial crisis, too. That is a testament to the ongoing need for self storage facilities all over the United States.
The market for self storage is expanding as well. Originally regarded as just an option to store personal property, more businesses are using self storage as an affordable way to hold extra inventory. This overflow space is cheaper than renting a bigger office, while providing a temperature-controlled, secure place to hold items which do not need to be accessed on a daily or even a semi-regular basis.
By drawing from both residential and commercial clientele, self storage facilities do not struggle with long-term vacancies in the same way as a residential property or an office building. Additionally, the ratio of vacancies to occupancies is more balanced as the average self storage facility has 566 units, so a vacancy’s impact is not as strong as an office complex with a few dozen spaces or an apartment complex with 100 units.
Self storage facilities are as “recession-proof” as commercial real estate can get. As the demand for self storage facilities grows, so do the opportunities to invest successfully in this sector of the commercial real estate market.
About Tulfra Real Estate
Tulfra Real Estate, a Rochelle Park, NJ-based real estate and development company has evolved into a major redeveloper for municipalities and corporations throughout New Jersey. Independently and with its institutional partners, Tulfra has owned or developed more than $1 billion in commercial and industrial properties in northern and central New Jersey over four decades. Tulfra has become a leader in helping communities and businesses maximize the development and income potential of their properties. Tulfra works with municipalities to transform underutilized or non-performing assets into successful projects in all asset classes including commercial, hotels, healthcare and residential that bring jobs and tax revenue to the community. It also helps corporations by using its experience and attention to detail in redeveloping properties into sites that meet the demands of 21st-century businesses. Additional information on Tulfra Real estate is available online at Tulfra.com.