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Hummingbird Dec 22, 2022

3 Self Storage Trend Predictions For 2023

See three trends that will be important to know for the new year in self storage.

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As we get closer to the end of the year, we start looking toward what the new year can bring. 

While it’s true that trying to predict future trends is a bit like trying to predict the weather any more than a couple of weeks out. 

However, for some time, the self storage industry was somewhat of an exception to this. The industry was stagnant and resistant to changes happening across other industries. But thankfully, this has changed and now it appears that there’s more change than ever coming to the self storage industry. 

A new generation of storage operators has been entering the storage space and have brought a need for drastic change within the industry and how it serves its customers.  While this has made it more difficult than ever to predict upcoming trends in the industry, it has not made it impossible. 

So to help bring you a few predictions trends you’ll likely see in 2023, we’ve talked to our CEO, Lance Watkins. He’s been in the industry for more than 25 years and has founded multiple companies that have transformed the self storage industry. 

His intimate knowledge of what’s happened in the industry for the last few decades, along with knowledge of technology offerings that are entering the space should give you confidence in his predictions. 

Trend Prediction 1: Dark Clouds Loom Over Self Storage

“We’re going to see some companies failing,” said Watkins. “There’s been some really aggressive underwriting that made a lot of serious assumptions to guarantee success, and if those assumptions don’t all come true, it’s not going to end well for those companies.” 

With interest rates rising, it’ll become that much more difficult for operators starting their self storage businesses to see large returns on investment for their new properties. 

The past few years have been fruitful for operators and new operators expecting the same level of success may be in for a rude awakening. 

Interest rates are rising and buyers have been overreaching. These higher interest rates have made it that much more difficult for self storage businesses to become profitable. With intereste rates expected to continue to rise, profitability will become that much harder in the coming year. 

Expect these interest rates to slow down storage development and storage acquisitions.

If you’re considering starting a self storage business or expanding an existing business, really study the markets. Don’t get a high-interest rate loan, and don’t fall for aggressive underwriting.

How to Navigate These Dark Clouds

If you want to squeeze that same level of success in a tougher environment, you’re going to have to be more resourceful. 

One way to do this is by lowering overhead costs by transitioning to a remote management strategy. 

Remote management, if you’re unaware is a method of managing your property remotely through the use of a e-commerce website and property management system. The website allows your tenants to rent your units entirely online, and then allows you to provide them with the access to move into your property. The idea is that you don’t need a manager onsite, or even an office at your property, because you can do everything from your home office. 

This strategy even allows you to operate a property in one state, while working out of another. 

FYI, Tenant Inc.provides facilities with the software they need to completely run their companies remotely.

Trend Prediction 2: Technology Becomes More Important to Self Storage

Expect more storage businesses to adopt emerging technologies in 2023. That trend is already happening at a good clip. 

People are getting used to renting online, to using their phones as keys to access their spaces, properties, and gates via  bluetooth locks such as Nokē Smart Entry System by Janus.  

And, Tenant Inc.’s ecosystem of self storage software offerings allow you to offer your your tenants a completely touchless rental experience, which is becoming more important as customers continue to favor purchasing experiences that don’t involve person-to-person interactions.  

And dont forget that adding new technologies to your business don’t just benefit your customers, they also benefit you and your managers by making your jobs easier. 

Also, look for facilities to add competitive features. Many of these have been around for a while, but we expect more facilities to use them. These include 24/7 access, climate control, online bill pay, and tighter security measures.

Trend Prediction 3: Self Storage Rental Prices on the Rise

As interest rates and inflation continue to rise, you can expect overall rental prices across different markets to rise. 

You will, however, need to be smart about how you raise your rates to stay competitive with competing facilities in your market. Competitive pricing will be especially important in 2023.

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