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Why Now May Be a Good Time to Invest in Self-Storage


Jul 14, 2020 by Maurie Backman

The COVID-19 crisis has changed the way a lot of people live -- and that doesn't just mean staying home more often and ordering grocery delivery instead of hitting the stores. Many people's living situations have changed, or have been put in flux, in the course of the pandemic, while recession-like conditions are making people rethink the expenses they want to commit to.

All of this means one thing: There's a good chance self-storage facilities will see an uptick in demand as more people grapple with the uncertainty that continues to abound. And that means investors have a prime opportunity to get in on the action.

Why now's the time for self-storage to shine

Accumulating things is human nature, while throwing them away isn't easy, and often, isn't feasible. And there lies the value of self-storage.

Self-storage units allow people to house their belongings while they figure life out. That's an especially important service today, and one that may get further utilized in the coming months.

Consider the countless college students who may not have a campus, or dorm room, to return to this August or September. Cramming their desks and furniture into their parents' basements may not be feasible. The solution? Temporary storage.

The same holds true for people whose living situations are in flux. Renters grappling with income insecurity whose leases are up may not want to commit to a longer-term housing arrangement at a time when the economy is sluggish and the jobless rate is in double-digit territory. The solution could be temporary housing -- housing that may not accommodate the belongings they've acquired to date. And once again, temporary storage comes into play.

Finally, some people may be thinking of exiting cities in the wake of the pandemic or downsizing their living space to cut back on costs in the absence of job security. And self-storage makes these situations far easier to bear.

As such, it's easy to argue that in the coming months, we'll see an uptick in self-storage demand as more and more people land in a situation where the roof they're putting over their heads is temporary in nature. And that's why now might be a great time for real estate investors to put some money into self-storage, whether by investing in physical businesses or buying self-storage REITs.

Let's also remember that it's not just individuals who are being impacted by the COVID-19 crisis and ensuing recession; businesses are hurting, too. Some may look to downsize their storefronts to conserve costs, and if these same businesses have excess inventory on hand, they'll need a place to put it.

Additionally, as more and more companies recognize workers' ability to do their jobs efficiently in a remote setting, they may seek to downsize their office space, and in the absence of wanting to sell or toss out unused desks and equipment, they may turn to temporary storage while they figure things out.

All told, self-storage is likely to come to the rescue in a world of scenarios during the latter part of 2020, and probably during the bulk of 2021 as well. Let's remember that while the coming year might bring a COVID-19 vaccine to the table, that vaccine won't erase the economic destruction the pandemic has caused overnight. Self-storage is a service many will likely rely on for at least the immediate future, and so an investment in that space could really go a long way.

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