Self Storage Business Overview

The self-storage industry provides individuals and businesses with a secure space to store belongings, equipment, or inventory. This service is typically offered through a variety of unit sizes, ranging from small lockers to large spaces that can accommodate vehicles or substantial amounts of inventory.

Related: Checklist To Start A Business

How Do Self Storage Businesses Make Money?

Self storage businesses earn income by renting storage spaces to individuals and businesses who need extra space for their belongings.

These businesses have multiple ways to generate revenue through their facilities and additional services. The most common ways include:

• Monthly Unit Rentals: The main source of income comes from renting storage units on a month-to-month basis. This represents the largest revenue stream because most customers rent units for extended periods, creating a steady monthly income.
• Premium Unit Options: Income from specialized storage units with climate control, enhanced security features, or indoor access.
• Vehicle Storage Fees: Revenue from dedicated parking spaces and covered storage areas for cars, RVs, boats, and other vehicles.
• Moving Supply Sales: Income from selling packing materials, boxes, locks, and other storage-related items at the facility.
• Insurance Sales: Revenue from offering storage insurance policies to protect customers’ stored items.

Industry Statistics

Self storage businesses provide secure spaces for storing personal and business items, operating under NAICS code 531130 – Storage & Warehouse Leasing. Here are statistics that highlight current trends in this industry.

Self Storage Industry Size & Growth: The storage and warehouse leasing industry generated $35.8 billion in revenue last year. The industry has experienced strong growth, with an average annual increase of 5.7% over the past five years. Growth is expected to continue over the next five years, driven by rising urbanization and increasing demand from residential customers downsizing their homes. Online retail businesses also contribute to industry expansion as they require more storage space for inventory management. (IBISWorld)

Number of Self Storage Businesses: There are 207,000 storage facilities operating across the country. Three major companies dominate the industry: Public Storage with $4.48 billion in revenue, Extra Space Storage with $4.06 billion in revenue, and CubeSmart with $1.07 billion in revenue. Public Storage maintains the largest market presence, while Extra Space Storage and CubeSmart follow as the second and third largest operators respectively. (IBISWorld)

Self Storage Profit Margin: Storage facilities maintain strong profit margins due to relatively low operating costs and steady demand. The average profit margin is influenced by occupancy, but the industry net profit margin is 41%.

Also See: Ideas for Naming a Self Storage Business

Costs To Start a Self Storage Business

Starting a self storage business typically requires between $250,000 and $2 million. This range accounts for different facility sizes and whether you’re purchasing an existing facility or constructing a new one.

Here are some of the common startup costs:

Property Acquisition or Construction: The largest expense is acquiring land and constructing storage units. For a small facility, costs typically range from $200,000 to $1.5 million, depending on location and size. This includes basic site preparation, unit construction, paving, and fencing.

Security Infrastructure: A well-designed security system protects customer property and adds value to your facility. This includes surveillance cameras, computerized gate access, security lighting, and individual unit locks. These systems usually cost between $15,000 to $40,000.

Management Software: Software to handle rentals, payment processing, security access, and customer accounts is essential for daily operations. Most modern facilities use specialized self storage management software, with setup costs ranging from $2,000 to $8,000.

Unit Doors and Partitions: Quality storage unit doors, walls, and partitions are crucial for security and durability. Installing commercial-grade doors and partitions throughout the facility typically costs between $20,000 to $50,000.

These estimates are rough figures – actual costs will differ depending on various factors and location.

Resources:
Self Storage Association