2023 Self Storage Industry Recap

2023 Self Storage Industry Recap: Navigating Economic Shifts and Embracing Innovation

The self-storage sector, resilient in 2023, faces economic shifts and tech changes. Recession predictions (47.5% last year) were defied, but recent surveys hint at a 60.8% chance in the coming year.

Last week, SBOA Vice President, Jessica Johnson, sat down with Chuck Gordon, CEO of Storable, a significant industry player, to discuss 2023 economic and industry data for insights. The focus is on the macroeconomic environment, storage industry trends, and practical tips for operators.

Macro Trends: Inflation and Interest Rates

Economic performance hinges on macro trends. Inflation, hitting 6.6% last September, remains high at 4.35%, leading the Federal Reserve to raise interest rates. The cost of capital for storage operators rose from 6% to 9%, impacting M&A activity.

2023 Industry Trends: Occupancy and Rental Rates

Storage trends mirror economic changes. The move-in to move-out ratio, peaking at 1.5 in May 2021, dropped below pre-pandemic levels. Occupancy rates, once at 92%, fell to 87% in the last six months, affecting tenant demographics and unit prices.

Facing Change: The Role of AI

Amid challenges, AI emerges as a significant trend. Storable Labs, an AI investment by Storable, focuses on optimizing workflows, enhancing customer experiences, and providing business intelligence insights. AI is expected to address challenges and drive innovation in storage.

Practical Tips for Operators: Navigating the Future

Operators must decide whether to expand or optimize portfolios as M&A activity slows. Focus on internal growth through operational efficiency, revenue optimization, and enhanced technology security. Storable suggests improving operational efficiency, exploring new revenue streams, and enhancing technology stack security.