How Inflation is Growing the Storage Industry

January 15, 2022

The Covid-19 pandemic catapulted the United States into an unprecedented state of panic and distress. As mandatory stay-at-home orders began to dominate the workforce leaving businesses empty and workers sitting at home, the economy began to shift into an ominous cloud lingering above the nation.

Although the US attempted to help the citizens stay on their feet and retain their assets, the best that could be accomplished was a temporary fix. People lost their jobs and their incomes. The threat of losing their homes loomed closely overhead.

  • Job loss
  • Unable to pay rent/mortgage
  • Unable to pay vehicle payments
  • The threat of loss of assets

The sudden onset of extreme changes forced a shift in the way that Americans and people around the world managed their lives. With businesses shifting from physical workplaces to work-from-home entities, the need for extra storage began to skyrocket. Suddenly, a multitude of people needed to rent storage facilities. This was a good thing for the storage industry.

Inflation and Storage

Over the years when hardships have taken place, the storage industry has been able to remain a great option for people that are in need of a place to store their important property. As many of the rest of the American businesses spiraled out of existence, the storage industry remained strong as ever.

The pandemic forced businesses and workers to scramble towards solutions that would allow them to work from home. Business owners needed space to store equipment from the abandoned offices. Workers needed to clear out extra bedrooms in their homes to create office space. As the need for extra storage space became increasingly prevalent, the availability of places to store stuff began to dwindle.

As with any other business opportunity, the factor of supply and demand forged a solid pathway to the top of the stock market.

Storage Industry Counters Inflation

It is a scary sight to see all of the other businesses crumbling before your eyes. Some of these businesses were able to re-direct their energy from brick-and-mortar establishments to online platforms. Some weren’t.

Obviously, there is no way to provide storage for material items in an online cloud. However, as much as the public needed storage space, there was no way to avoid the storage industry’s increase in revenue.

People need storage space and are perfectly happy with paying more money for it. Storage places simply had to increase their prices for storage by just a little bit for each storage unit, and they would generate massive extra revenue.

Although shortages of goods shoved the prices of common necessities upwards of 6% in some places, the storage industry was able to counter the increases by increasing its own rates. Instead of being victims of increasing prices, they countered the attack by balancing out their own incomes.

Storage Stock Prices Soar

It is not surprising that in the midst of the tremendous demand for storage space, the stock values of the storage market have skyrocketed. Research shows that the storage market value topped out at over $87 billion in 2019 and is expected that by 2025 it will rise well over $134 billion.

Although there is an issue with delinquency, the storage facility is in possession of the property of the tenant. The greater number of people that store their important belongings do not want to lose them, so they tend to be more reliable for monthly payments than other types of industries that thrive on payments.

The fact that the value of storage facilities continues to rise means that the industry has nothing to fear in the future.

Since the opportunity for investment is so encouraging, investors are jumping at the chance to purchase property for the purpose of building on-site storage facilities. As the demand for storage continues to soar, the investors are competing to get their money in the mix.

For multifamily apartment complexes that do not already have on-site storage in place, now is the best time ever to invest in on-site storage solutions that will not only provide extra storage space for the tenants but also increase the value of the property as well as tap into the ever growing value of the storage industry.

Inflation Could Be a Ray of Hope

Just because everything is gradually raising in price, does not mean that it is a bad thing. In fact, some financial experts believe that the inflation that is happening across the country in early 2022 is a good thing for the economy. As the country struggles to get back on its feet the people are out and about spending money.

  • Going to theaters
  • Dining at restaurants
  • Increasing in-store shopping
  • Traveling for vacations

This increase in inflation is expected to decrease by 3% by the end of the year 2022. Although it seems horrible, there is light at the end of the tunnel.

The Bottom Line

Although there are differing opinions regarding the storage industry, the one truth that holds tight is that when people need a place to store their important belongings, they can depend on the storage industry to keep their property safe.

The most profitable times for storage facilities are during times of distress for the people. This is a double-edged sword. Investors putting their money into investments that profit from the adversity of others seems to be a bit dark. However, if nobody took action to supply the space the people need, there would be none.