Recession Proof Real Estate

.0pt; font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-bidi-font-family: "Times New Roman"; mso-ansi-language: EN; mso-fareast-language: EN-US;" lang="EN">They’re often called

recession-proof – steady investments that are inexpensive and easy to maintain

with consistent profit margins.

Not to mention, they’re one area of real estate that seems mostly unaffected,

if not helped, by current rough market conditions.

They’re storage units and people always need them. And all across the country,

with a growing population that provides a constant supply of people in transit

and in need of storage, they’re shooting up everywhere. Storage facilities

require relatively low building and management costs.

Storage facility operators are capitalizing on a constant of modern culture:

Americans own a lot of stuff. According to the Self Storage Association (SSA),

self storage has been the fastest-growing sector of the U.S. commercial real

estate market for the last 30 years, growing into a $220 billion industry. The

rate of growth, however, has slowed somewhat over the past two years.

A slow housing market can actually help storage facilities, according to

industry analysts and local facility operators. As the housing market slumps,

people downsize their house sizes and some are even foreclosed upon. People

like to hold on to their possessions, and with the same amount of things but

less space to put them, they look to storage facilities. Also, hesitant

homebuyers store their possessions as they watch what happens to the housing


By looking at demographic and growth trends, it’s clear why storage units are

in such high demand. Population is growing and while people wait for their

homes to be built or are searching for homes, they store away their belongings.

Also, people with second homes here often store their large possessions like

snowmobiles and RVs in units while they’re away. Wealthier people have more

belongings and often rent out more spaces. Some just the basic concrete and metal sheds and others with

climate-controlled heating systems. The climate-controlled units maintain a constant

temperature of 58 degrees and are used for items vulnerable to the elements

like wood and antiques.

Also, high fuel prices and economic slowdowns don’t generally deter wealthy

people from enjoying their recreation and second homes.

Businesses use storage units too. Companies like the Old World Cabinet Company

use the spaces as warehouses. With the high price of real estate in offices,

sometimes it’s more economical to rent storage units than to buy up more space.

One concern for storage operators, though, is the potential for a flooded

market. Overbuilding has been a problem for storage facilities across the

nation, but most areas have avoided this trend.


Scott Meyers is the owner and President of Alcatraz Storage, which operates several Self Storage Facilities in the Midwest. He also runs Scott is a Certified Self Storage Manager (CSSM) through the National Self Storage Association and has been a real estate investor since 1993. He was an instructor of the Landlord 101 course through the University of Indianapolis and now Scott Speaks to Investor groups...

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