Self-storage continues to be a consistent industry to attract investors. As of this post, the average occupancy rate in the state of Florida still holds close to 93%, according to the Commercial Observer. Self-storage continues to prove to hold strong despite the current tumultuous economic situation.
Even in a state like Florida with high tourism, the need for storage continues to be strong with RVs, boats and other larger items as the population of Florida continues to grow. According to the latest US census data, Florida’s population grew 1.9% from 2021 to 2022 to become the leader of the 50 states. What does this mean for the industry? As we look ahead to 2023, there are things to consider as you approach your self-storage investments.
- Cost of construction
- Occupancy rate
- Efficient operations
Cost of Construction
The cost of construction will continue to present challenges for new builds. Additionally, the supply chain issues for some materials will continue to keep the cost of goods higher as certain industries have not yet returned to normal. According to an August 2022 report from CBRE, construction costs may rise as much as 14.1% over 2021. Because inventory of products is lower due to production stalls in 2020, this directly impacts new construction and may continue to present challenges for the next several years.
Occupancy rate
The occupancy rate remains steady above 90% across the country. Florida benefits from a high occupancy rate of around 93%, as mentioned before. The demand for the self-storage appears to be in a holding pattern currently, which means that self-storage owners will need to pay attention to any local changes and make business adjustments accordingly.
The cost of housing continues to increase, which means that Americans will move less. Additionally, they may reconsider their need for self-storage if they can liquidate their belongings and cut their personal expenses. This doesn’t mean owners should make flippant decisions about rates and vacancies. It means that owners need to be prepared and ready to pivot if local demand begins to decline.
Efficient operations
Consumers continue to look for ways to engage as little as possible in day-to-day interactions. According to PaymentsJournal.com, contact-less options are the preferred method of payment for most of Gen-Z. While one group doesn’t solely drive the adoption of the contact-less business, it’s important to consider how this can positively impact your business strategy. Technology provides benefits to business operations as it makes it possible to generate new rentals online, provide quick access to customer service, enable seamless and timely rent payment and provide traceable access to the facility.
One final benefit to more efficient operations via contact-less options is that you can streamline your staff to operate efficiently and not be negatively affected by the current labor shortage. Anyone actually hiring people to work understands the reality of the current labor market. The use of technology may provide some relief, even long-term, in business operations. Additionally, it would also cut down on payroll.
At Weaver Realty, we serve as the Argus Network Affiliate for the states of Florida and Georgia. Our self-storage industry experience enables us to support our clients as they grow their portfolio. Call us today at 903-733-0039 and find out how we can help grow your self-storage business.