Declining homeownership rates have boosted demand for storage units
Los Angeles, CA (PRWEB) March 06, 2012
The Storage and Warehouse Leasing industry is centered on American cultural phenomena: geographic mobility, small business development, consumerism and the desire to accumulate possessions. Since the first self-storage facilities popped up in the late 1960s, the industry has been one of the fastest-growing sectors of commercial real estate. Says IBISWorld industry analyst Kathleen Ripley, “It has performed consistently well and remained resilient through varying economic conditions.” Despite the recent economic downturn, revenue remained relatively stable at 0.5% average annual growth to $24.3 billion in the five years to 2012. Several factors are responsible for industry growth, including declining homeownership rates, a high rate of foreclosure and practically no new supply in the industry. As demand grew, industry operators increased rental rates and reduced the number of customer incentives and promotions offered during the economic downturn.
Although Storage and Warehouse Leasing industry revenue fell during the recession, the industry remains a profitable one. Self-storage operators generally have low overhead costs, with limited staff, few utilities and low maintenance costs, which contribute to substantial profit margins. Additionally, operators with multiple locations benefit from economies of scale since centralized resources can be used to manage and market more space. As operators increasingly leverage economies of scale, the industry is consolidating; larger operators have expanded through development programs and aggressive acquisition campaigns. According to Ripley, this consolidation has contributed to a slow decline in enterprise numbers over the past five years.
As the industry is bolstered by economic recovery, an increase in consumer spending and slow growth in new establishments, industry revenue is expected to grow in the coming years. As lending standards loosen from their current restricted state, investment in the construction of new storage facilities is expected to increase. With a marked increase in new storage facilities in 2014, competition is projected to heighten and somewhat curb revenue growth. The highly competitive nature of this industry places pressure on participants to increase market share, increase profitability and maintain high-quality facilities. As a result, consolidation is expected to continue over the next five years, with the larger and medium-size firms increasing scale and expanding operations by acquiring smaller companies and independent facilities, a trend experienced over the past five years. For example, Public Storage Inc.'s significant presence in the industry is largely the result of a 2006 merger with Shurgard Storage Centers and expansion through an aggressive acquisition campaign. Other major companies include Extra Storage Space Inc., CubeSmart, Sovran Self Storage Inc. and Amerco. For more information, visit IBISWorld’s Storage and Warehouse Leasing report in the US industry page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
This industry primarily rents or leases space for self-storage. These establishments provide secure space where customers can store and retrieve their belongings at their convenience. Industry storage units include rooms, compartments, lockers, containers and outdoor space.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.