Self-storage: Is it the most recession-resistant and Covid-resistant asset?
The self-storage market, once regarded as a niche investment, is looking better than ever and enjoying its second boom, not deterred by either the current global recession or the post-pandemic conditions, it seems.
Recession-proof and Covid-proof?
The self-storage industry, which has been touted as a “recession-resistant business”, was truly put to the test during the pandemic, and the recession that has followed. Despite the gloomy economic conditions, both investors and buyers as well as operators will likely benefit now and in the future.
If we look back a few years, self-storage occupation rates, jumped to 94.5% in 2021, compared to the pre-pandemic era of 2019 when it stood at 91%.
When people think about commercial or residential investment, they typically visualise office buildings, apartment complexes, etc. However, self-storage units have proven to be great business, garnering plenty of capital to invest further.
The self-storage sector is one of those rare sectors which perform brilliantly through both good and not-so-good economic conditions.
Interestingly, self-storage investment trusts were the only type of real estate asset which remained positive in the 2008 financial crisis. Naturally, there’s no guarantee that the same will repeat while the world is still recovering from the Covid bubble, but at the same time, there’s no genuine reason to think that it won’t happen again. It absolutely can.
Students, for instance, had to go home because of closed universities – something which was a really ‘bad thing’ for multi-family real estate investors but great for self-storage. The students needed to tuck away their belongings for the time being and we saw self-storage occupancy rates shooting up.
According to NAREIT (National Association of Real Estate Investment Trusts), specialising in self-storage fell by only 11.11% from the start of 2020 through to April. Hotel real estate actually fell by a shocking 53.69% during this period, which again, shows the stability of self-storage facilities in recessions and a global pandemic.
Closing thoughts
The self-storage sector, not just in the UK but anywhere in the world, has proven to be a very unique asset class – it has maintained steady growth throughout Covid, the Great Recession, and the Great Resignation.
This stability indicates the generous investment pouring into the self-storage industry, and as prices and inflation continue to mount, we see more money rolling into self-storage.
Woodpecker’s self-storage units in Southampton are considered one of the best in the industry. Choose the size that best suits your needs and book it now.