Marcus & Millichap

2019 Self-Storage US Investment Forecast

Special Research Report

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National Economy

  • Steady job creation will sustain economic growth in the coming year, but the tight labor market will create a highly competitive recruiting climate that restrains total job additions. To attract and retain top candidates, companies will continue to raise wages, but they will also revisit their benefits, work environment and job locations. Several major businesses are opening offices in new areas to tap local talent instead of trying to relocate sta members to existing facilities, migrating job creation to a variety of markets across the country.
  • The U.S. economy remains structurally positioned for growth in 2019, thanks to steady employment gains, wage growth and increased consumption. Opening the year with a government shutdown and a volatile stock market could weigh on momentum, however. Greater trade barriers and slowing economic growth internationally could contribute to a modest step back in the pace of expansion this year.
  • Home sales have trended lower as a variety factors weigh on demand, including the fact that the majority of millennials have yet to make a meaningful move into homeownership and continue to rent. The slowing housing market could weigh on growth but aids self-storage.

National Self-Storage Overview

  • The self-storage industry continues to benefit from long-term demographic factors, including the aging of the millennial generation. The 80 million strong population cohort represents a little less than a third of all non-commercial self-storage renters. That proportion is likely to rise as the leading edge of the demographic group enters their primary income-earning years.
  • Private businesses are a major source of self-storage demand, and more companies are likely to make use of such facilities this year. The economy supports business expansion, and self-storage offers a cost-effective option compared with office and retail rents.
  • Fewer completions are anticipated for 2019 relative to last year, but deliveries are still elevated. Subdued construction earlier in the
    cycle has left many metros with pent-up demand for new storage supply, benefiting properties in even the most actively developed
    metros. Nevertheless, certain businesses will face competition for leases within pockets of concentrated construction.

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