SELF STORAGE: RECESSION PROOF AND IN HIGH-DEMAND
Self storage has risen to the top as a strong and lucrative asset class over the past two decades. This is due to the nature of use and demand across a variety of demographics and geographies. No matter the economic climate, there will always be a need for self storage. The industry is generally considered recession resistant¹ and current and long-term trends continue to favour the self-storage industry. Storage draws customers from a diverse base both residentially and commercially, the contracts are short term and may re-price to track inflation. Increase in housing demand, stemming from immigration, a mobile workforce, and e-commerce all support demand for self-storage. Further, as populations shift from cities to secondary and tertiary markets for cost of living and lifestyle reasons, the markets that Black Sheep Storage is targeting will continue to grow.
The self storage and warehousing industry in Canada in 2022 have a market size of $12.9B and is expected to increase by 2.8% next year. The market size of the public storage and warehousing industry in Canada increased faster than the transportation and warehousing sector overall in 2022. One of the many factors affecting public storage is the shift from bricks & mortar stores to online retailers and individual sellers. The surge in demand for online ordering since 2020, has resulted in inventory moving in and out of self-storage facilities. Demand from e-commerce and online auctions websites is expected to continue to increase creating more demand for self-storage.²,³
Immigration in Canada is expected to reach 450,000 in 2023 and 2024 and has been increasing in the years prior. Higher population will translate into self-storage industry growth as housing booms trigger self storage booms. Other factors affecting storage demand include anything related to transition, change of life circumstances such as death, divorce, and marriage. Families are downsizing due to employment uncertainty and Baby Boomers are now shifting to retirement, both of which require more storage facilities.⁴ General downsizing also contributes to self storage boom with renovations and moving to smaller living areas and workspaces as well as business incubation, e-commerce, last-mile solutions and lack of warehouse space. We expect these trends to continue in 2022 and beyond.⁵
The pandemic has spawned or fueled two important trends. The first is a transition of people from metro areas to surrounding suburbs and rural areas in Canada. This trend mimics the experience in the United States where self-storage has thrived in the secondary and tertiary markets.⁶,⁷ The second is the shift to “staycations” and outdoor-recreation. There has been a surge of recreational and sporting equipment, travel closer to home and near nature, and recreational vehicles. All that extra equipment needs a place to go.
The self-storage asset class has remained strong through economic cycles, with recent social trends making it an attractive investment. The continued ability for the self-storage industry to generate cash flow is positive, and the industry has demonstrated its resilience during the last few years of unprecedented uncertainty across Canada and the U.S.⁸
¹ Self-Storage Industry Outlook in 2022 and Beyond - Storable Blog
² Global Oil & Gas Exploration & Production - Market Size | IBISWorld
³ Canada Self Storage – 2021 Market Trends | Resources (stortrack.com)
⁵ IR Labs Inc. - TSX-V_SVI_2021.pdf - All Documents (sharepoint.com)
⁶ Self-Storage Industry Outlook in 2022 and Beyond - Storable Blog
⁷ Canada Self Storage – 2021 Market Trends | Resources (stortrack.com)
