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Self-Storage Temperature Check: Gauging the Status of 6 Industry Items Heading Into the New Year

Self-Storage Temperature Check: Gauging the Status of 6 Industry Items Heading Into the New Year
No matter how much the dominance of COVID-19 has made the last 22 months feel like one long year, the change to a new calendar brings new opportunities and challenges for self-storage operators, developers and investors. Let’s check the temperature gauge on six aspects of the industry as things heat up for the new year.

It’s not unusual for a new year to initially feel a lot like the previous one, but the nearly two-year dominance of COVID-19 in impacting daily home and work life has made discerning between calendar years even more precarious. Setting business and personal goals can seem like a futile exercise under this continual cloud of uncertainty.

Still, if we’ve learned anything since March 2020, it’s that the self-storage industry keeps pushing forward better than most comparable retail and real estate sectors. It’s certainly not impervious to the market factors that have disrupted countless industries, but it’s business model is well-positioned to withstand the kinds of disruptions we’ve witnessed the last 22 months.

Based on how the industry has performed and pivoted since the onset of the pandemic, it’s fairly reasonable to make some assumptions on what’s in store on the development, investing and operational fronts for self-storage at the outset of 2022. Many of the industry trends we witnessed through 2021 are likely to continue through at least the first half of the new year.

Here’s a temperature-gauge check on a few relevant, big-picture items.

New Development

Temperature Gauge: Holding Steady

Though the development boom has cooled somewhat from a few years ago, investors and developers continue to find pockets of opportunity. Even in markets that appear saturated, there are occasionally sub-markets with room for growth. In many cases, the challenge for those pursuing new construction is beating to the punch established operators with the ability to expand existing properties.

The number of medium-sized, regional and national operators with multiple projects in their development pipelines is impressive, despite many ongoing municipal challenges (zoning restrictions, building moratoriums, etc.). Strategic builds, such as mixed-use projects, are likely to remain in vogue this year to help gain favor with city officials.

Facility Sales

Temperature Gauge: Rising

With viable new ground on which to build increasingly difficult to secure, it’s not unusual that the self-storage real estate market has remained particularly hot. Among the most telling factors that’s been popping up in our monthly reporting of industry-related sales and acquisitions is the increased frequency of small facilities being gobbled up.

Not long ago, many buyers wouldn’t give an existing facility under 50,000 square feet much of a look. With industry consolidation in full swing, facilities under that threshold—some at 25,000 square feet or less—are a hot commodity if they have room for expansion. In many cases, properties are being snatched up by aggressive investors in off-market deals. If you’re a small operator with an inkling to kick start your exit strategy, now might be the time to take the money and run.

Disaster Preparation

Temperature Gauge: Rising

The severity of catastrophic weather events and natural disasters has been steadily rising, and there’s little reason to assume this year will be any different. In fact, the insurance-market forecast for this year is a bit bleak. If you’re in a geographic area prone to hurricanes, tornadoes, wildfires and other threats, make sure your insurance coverages are where they need to be.

If you don’t already have one, now’s also the time to create and implement a disaster-management plan. The last thing you want to have happen in the face of a crisis is to be caught flatfooted in how to file necessary claims, help and communicate with tenants, and handle media inquiries.

Systems Integration

Temperature Gauge: Rising

At this point, it’s probably safe to bet that the uptick in technology adoption will continue through this year. Operators who haven’t already adopted contact-free practices for unit rentals and move-ins are more likely to do so thanks to the uncertainty of the pandemic and the danger of falling further behind competitors.

Similarly, technology providers continue to innovate and announce deeper integrations with facility-management software, which promise to raise the level of operational efficiency for owners and managers alike. Look for more integrations to occur this year from industry suppliers, including practical and tangible applications for the Internet of Things.

In-Person Events

Temperature Gauge: Holding Steady

Last year saw the return of most in-person industry events, including the Inside Self-Storage (ISS) World Expo, and this year projects similarly, barring any unforeseen developments with the pandemic and other factors. Show organizers not only want to re-establish event continuity and connections between industry peers, they’re likely to return shows to more traditional formats if given the opportunity. In fact, the ISS World Expo has already announced its intent to restore many parts of the conference and expo to their pre-pandemic formats, including the return of physical badges and holding exhibit hours without overlapping with educational seminars.

Self-storage educational events are a great way to network and get up to speed on the latest industry trends. Most of the trending and big-picture items discussed above will be on the educational slate when the ISS World Expo convenes April 19-22 in Las Vegas. We look forward to seeing you there!

COVID-19 Disruption

Temperature Gauge: Rising

The omicron variant has given rise to another massive surge in COVID-19 cases, causing more disruptions to businesses, schools, air travel and local economies. One big difference between now and March 2020 is the current business impact stems largely from temporary staff shortages rather than full shutdowns.

The good news is omicron appears to be much more manageable than the delta variant, particularly among the vaccinated and boosted. As a result, some experts believe we may finally be seeing signs that the virus has taken its turn toward being endemic—something we’ll learn to live with rather than eradicate. If that’s the case, hopefully we’ll be able to cool the temperature on widespread disruptions sooner rather than later.

Of course, this pandemic has taught us not to let our guard down. It’ll be prudent to remain flexible in thinking and operation where possible to be in a good position to roll with whatever waves of change may come our way again in 2022. Wherever you are, whatever your role in the industry, all the best for a healthy and prosperous year ahead.

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