With a recession looming, commercial real estate investors are scrambling to decide where to invest. As a sector with a strong track record even during tough economic times, self-storage might be worth considering.
MJ Partners Real Estate Services notes that the self-storage industry looks to have a healthy growth trajectory thanks to factors such as the desire to declutter, the ongoing shift toward renting rather than owning, the general downsizing of households, and the relocation of Americans for job changes. Recessions are likely to maintain many of these factors.
Recessions are unlikely to have a significant impact on self-storage facilities.
It is likely that self-storage facilities will remain good investments if other asset classes bounce back and the economy improves. High demand and a stable customer base are responsible for that.
4 Ways Self Storage Is Recession Resistant:
1. Self-Storage Demand Increases in a Recession
Self-storage space demand actually increases during recessions unlike the other sectors listed above.
2. Self Storage Has Low Operational Costs
Self-storage properties are relatively easy to operate, which is an advantage for investors.
3. Self Storage Relies on Multiple Tenants
4. Self Storage Rents Are Flexible
Shorter lease terms mean tenants can move out with little notice, which negatively impacts your bottom line. While at the same time, this flexibility offers a great opportunity to adjust rents based on rising operating costs.