On June 30th, 2024, the SSA released early results from the SSA Industry Confidence Survey, conducted in May with self storage owners and managers. The summary concluded that operators had an optimistic outlook for the industry today and for the remainder of the year. The survey was previously conducted in 2020 in the midst of Covid, and the industry has since weathered an economic downturn, soaring inflation, and sharply rising interest rates. How have operators’ views of the industry evolved in light of those changes? This article compares this year’s survey results to those of 2020, noting some important shifts – as well as similarities - over time. In future editions, we’ll examine variations by region and other facility characteristics.
Sustained Overall Optimism
Owners’ and managers’ outlook for the industry overall and for self storage demand has remained solidly positive over the past four years. In 2020, the overwhelming majority of operators (86.1%) expected the industry to remain on its current path or improve in the following year. That number has not significantly changed (83.0%) in 2024, indicating continued optimism for going into 2025. Fewer than 1 in 5 operators believed the industry would worsen looking forward from either 2020 or 2024.
Similarly, about the same percentage of operators in 2020 (86.3%) expected long-term demand for self storage to remain the same or increase, again with no significant change in 2024 with that expectation (83.0%). Taken together, these results indicate strong confidence in the industry and in continued demand for self storage moving through 2024 and beyond, and despite the current economic situation.
Delinquencies on Track for Decreasing
Always a costly headache for operators, delinquencies are reportedly declining somewhat. About two-thirds (68.9%) of operators reported stable or decreasing delinquencies in 2020, with nearly three-quarters (74.1%) anticipating further decreases or stability for the remainder of that year. And indeed, three-quarters (75.1%) reported that delinquencies have in fact decreased or stayed the same in 2024, with further decreases or stability expected for the remainder of 2024 (77.8%). That said, the expected declines are somewhat mild and not significantly different from those in 2020.
Discounting and Specials also Stable or Decreasing
Often a concern for operators, especially smaller and regional businesses, more than half (59.5%) in 2020 stated that they expected specials and discounting to continue at their then current pace or to decrease over time. That number rose slightly but did not change significantly (62.3%) in 2024. These practices are often a topic of discussion in any industry, especially when deep initial discounts are followed by rapid rate increases and added fees. Importantly, price transparency is also being examined closely by public officials across a broad swath of industries and will have interesting implications for self storage in the months and years to come.
Increased Concerns over Interest Rates
Overall, several specific industry concerns have risen slightly since 2020, and one has increased substantially, as a result of economic trends over the past four years. The economic downtown was the top concern among operators in 2020 (57.0%) and continues to be so in 2024 (61.3%). But interest rates are a different story. Only about a third of operators (35.8%) were concerned about higher interest rates in 2020 – in fact, the least of the five concerns measured – but jumped twenty-two points to the number two position, just behind the economic downturn, in 2024 (57.9%). And for good reason – the prime rate was just 3.25% in June of 2020 and has since more than doubled, currently 8.5% in June 2024. The impact of these higher rates on overall inflation, mortgage rates, and the housing market have been well-documented. Especially critical to the self storage industry, the SSA Demand Study has shown since its founding in 2005 that residential moves are one of the most important drivers of self storage demand.
Perhaps not surprisingly then, concerns about oversupply have risen since 2020 (49.5%) to among more than half of all operators in 2024 (56.4%). Similarly, concerns about diminished consumer demand have risen slightly from 2020 (36.8%) to 2024 (42.4%) but are still shared by fewer than half of all operators. Lack of debt options was among the least of concerns in 2020 (36.1%) and remains so in 2024 (36.2%).
It's worth noting that concerns about potentially decreasing demand and oversupply prompted the SSA to conduct its first consumer and business-based SSA Demand Study in 2005. The prime rate had risen throughout 2004 from 4.00% to 5.25%, landing at 6.01% in 2005 – lower than the current rate but substantially higher than 2020’s 3.25%. So, concern was certainly warranted then as it is now. That said, the study has consistently shown strong consumer and business demand, in fact increasing somewhat over time, since 2005.
Movers and Shakers
Operators indicate bri
sk tenant turnover for 2024, with expectations for continued activity somewhat higher than in 2020. Nearly three-quarters of operators (74.1%) reported that their move-in activity was steady or increasing in 2020, with a somewhat greater portion (80.6%) expecting further stability and growth for the remainder of that year. The number reporting sustained or increased move-in activity did not change significantly in 2024 (71.8%), although a greater portion (89.5%) are now expecting steady or increasing move-ins for the remainder of this year.
Similarly, three-quarters (75.9%) of operators reported steady or increasing move-out activity in 2020, with a similar number (78.1%) forecasting continued stability or growth for the rest of that year. In 2024, the number reporting steady or increasing move-out activity rose to nearly nine out of ten operators (85.8%), with the same number (85.8%) expecting that trend to continue throughout the remainder of this year. Taken together, these findings suggest continued and robust renter turnover throughout 2024.
Conclusion: Cautious Optimism
Comparisons of the 2024 SSA Industry Confidence Survey with those of 2020 present a picture of continued confidence in, and optimism about, the current state and near future of the industry. Operators report a positive outlook on the industry and overall demand, as well as steady turnover, and declining delinquencies. By the same token, operators are haunted with legitimate concerns about the state of the economy, rising interest rates, and the possibility of softening demand. Many operators have attempted – often successfully – to address these concerns by adopting technologies and practices that enhance customer service and security while increasing revenue in spite of possible fluctuations in occupancy at their facilities. And these trends are expected to accelerate with further technological advancements, including AI, and increasingly widespread access of those technologies even to smaller operators. Marketers are also focusing on self storage applications not tied to home purchases, much as the residential construction industry has shifted from home construction to home improvements. Afterall, “necessity is the mother of invention” and the current economic headwinds so far seem to be strengthening the resilience and resolve of the industry.