The self-storage sector is deemed recession-resistant by experts because the demand stems from life events such as moving, change in marital status, or downsizing. Self-storage REITs were among the few real estate investment trusts to produce positive returns during the Great Recession. As a result, self-storage development rapidly increased, and roughly ten percent of the current U.S. population rents a storage unit. However, the construction boom led to over saturation in major markets, creating operational challenges for the asset class, such as increased competition for customers, thus a decrease in rental rates. Yet, demand is still present, and scheduled openings for new facilities have been delayed, reducing the competition for new customers. Additionally, a new wave of customers could stem from any economic damage caused by COVID-19, such as households vacating virus hotspots.
In this report, Matthews™ explores the self-storage sector’s performance during the pandemic.