A top self-storage exec explains how demand and occupancy within the sector have been resilient during the coronavirus pandemic
- First-quarter data will likely show little impact from the coronavirus outbreak on the self-storage sector, according to Steven Weinstock, who oversees one of the major self-storage businesses in the US.
- While second-quarter data will show more of an impact, Marcus & Millichap's Weinstock said occupancy rates will likely stay the same.
- Weinstock told Business Insider that while the outbreak has caused a shift in demand, people will always need to store their stuff, regardless of the state of the economy.
Despite the coronavirus pandemic, demand and occupancy in the self-storage sector have remained relatively resilient — and in some areas demand is surging.
And the self-storage space is massive: it was worth $37.3 billion in 2018, according to Statista, with more than 90% of its inventory being in the US. Marcus & Millichap, the commercial property firm, writes an annual special report surveying the space, and shared its insights with Business Insider. Marcus & Millichap also disclosed that in 2019, it closed 227 self-storage transactions with a value of more than $1.1 billion.
In a letter posted on March 14, Adam Schlosser, senior director of the National Self Storage Group at Marcus & Millichap, wrote that investors' appetite for self-storage remains positive, liquidity for deals remains cheap and robust, and CMBS markets remain available and healthy.
Marcus & Millichap's special report predicts that "space demand for self-storage units will experience little if any impact from the coronavirus." The report notes that the national vacancy rate closed at 9.9% in 2019 and is expected to close just 0.1% higher in 2020.
Still, the nature of the pandemic has led to isolated cases of no vacancies. When colleges were closing campuses in March, for example, some small-town storage facilities ran out of units. According to a report by The Daily Item, a local newspaper in Sunbury, Pennsylvania, Ideal Self Storage filled all 300 of its units in Lewisburg after Bucknell University announced that classes were canceled.
"When you enter into difficult economic times, self-storage has a way of being counterbalanced against the economy," Steven Weinstock, who oversees Marcus & Millichap's self-storage division, told Business Insider.