What is The Market?
People talk about it like it’s some nebulous force, a mysterious spirit that picks winners and losers, sinks businesses, or creates wealth. Like the oracle at Delphi, anyone who can decipher the whims of The Market can see the future.
But the Market isn’t so much mysterious as it is incredibly complicated. Global economic conditions will absolutely affect your neighborhood, and your neighborhood’s dynamics are going to affect your business even more.
There’s too much information for any one person to internalize.
That doesn’t mean you shouldn’t pay attention, though. We talked to John Chang of Marcus & Millichap and got some great advice on what trends operators can actually follow and make use of.
If you can see what’s coming, you can change your marketing tactics, your rate changes, and other flexible parts of your business to adapt. At the very least, you can have a plan in place!
So, let’s take a little peek into the future of the self storage industry.
The single trend that correlates best with self storage use is household formation.
That means the number of people willing to get married, have kids, move out of their parent's house, give up their roommates, or whatever.
No one accurately tracks household formation that we know of - households can look very different for different people! But household formation does track very closely to the trend we do have good data for - consumer sentiment!
Consumer sentiment is a measure of how people are feeling about the economy and their own personal economic situation. This may seem unscientific (what do you mean we’re tracking feelings?), but people don’t make decisions based on data. They make decisions based on how they feel!
Lots of different pollsters track consumer sentiment, and it’s an important enough metric that major news outlets follow it, too. When consumer sentiment is high (or good), people are more willing to take the financial commitment of forming a household.
When people form households, they move, they buy new stuff, they combine different sets of old stuff, and they need storage.
If consumer sentiment is negative, as it was through 2023, people don’t take those risks. Or, at least, not as many people do.
If you’re worried about demand in the coming year or two, especially as competition ramps up, take a peek at consumer sentiment. That will give a pretty good approximation of where the general demand for storage will be.
Here are a few places to check on consumer sentiment:
People. People need self storage.
We can get a lot more granular, but the number of people in your area directly correlates to the number of people in your area who need a storage unit.
The US Census Bureau is the go-to source for this sort of information. They have an incredible amount of information, so you can get as detailed as you want with your analysis.
State-to-state migration and county-to-county migration data can be useful. You’ll see whether your area is growing or shrinking, where people are coming from, and some other useful information.
The Census Bureau is the most authoritative source of data but not the easiest to use. If you have the time and inclination, you can dive as deep as you want into the data, but if not, just keep an eye on the population growth or decline in your area.
Local news may be a good source for that information, too. Statewide trends don’t matter much if the immediate area around your facility is losing people.
Odds are good you know a realtor or two. They can be a good source of information for the population changes in your area of service and for the housing market!
A hot housing market can indicate an increase in demand, and a dead housing market probably means people won’t be moving very much.
However, a dead housing market can mean that people will run out of space for new stuff. During the pandemic years, storage did incredibly well even though there were periods when no one was moving. People spent money on outdoor equipment, RVs, boats, or just new toys, but they didn’t have the space to store it all.
Real estate agents are going to be paying close attention to demographic trends, and if you have business relationships with any of them, asking them your questions is the easiest way to get the inside scoop.
The big money has taken a liking to our industry. Investment firms, REITs, and other sources of investment are going hard on self storage - sometimes buying up underperforming facilities and sometimes building new ones.
According to John, one of the best ways to see how competition is trending is to look at how much money is being spent on construction for storage.
You can get even more granular if you want to see what construction projects are currently under development in your neighborhood!
The best way to do this is to check out your local government’s offerings. The county clerk’s office, your local Geographic Information System (GIS), or your Chamber of Commerce may have the information that you need.
Marcus and Millichap offers reports on self storage that might have high-level information, too.
John Chang also recommended other data sources for storage operators trying to keep an eye on trends:
Once you’ve found the data you’re looking for, though, what do you do with it?
Seeing the future is only useful if you can use it to make decisions.
If you see the future is looking great but don’t change anything, that’s not beneficial.
If you see disaster headed your way but can’t act to avoid it, that does you no goo,d either.
We can’t tell you what to do for your specific facility. Maybe you’re operating at maximum capacity already and don’t have any room to increase marketing spend. Maybe your facility is full of long-time customers, and a dip in demand won’t really hurt you!
Here are some starting points to make a plan for good and bad times -
Of course, none of these trends can tell you exactly what’s going to happen! The overall market may be in the dumps, but your neighborhood is roaring - or vice versa. Don’t forget to look around you. Your market is usually the 10, 15, or 20 miles surrounding your facility.
What happens in that little circle is going to matter more than what happens across the globe. But still, global trends will reach down into your town, and knowing what they are can only help.
Looking to learn more? Check these out!
At StoragePug, we build self storage websites that make it easy for new customers to find you and easy for them to rent from you.
