Over recent decades we have seen the investment opportunities of self-storage steadily incline as the business becomes the fastest-growing segment of the commercial real estate industry. Top Wall Street analysts have even called it “recession-resistant”, because when the economy is good, the industry does well; moreover, when the economy is on the decline, the industry has proven to profit even more so. In a time of economic decline as the world recuperates from the Covid-19 Pandemic, self-storage is a smart, tried and true investment opportunity to diversify your partnership portfolio. At Precision Global, our most recent prospect during this time is in exploring the advantageous and profitable market of sustainable, durable shipping containers that can survive a looming recession.
Value and Design
Shipping containers have become exceedingly valuable because of their design; they are incredibly structurally sound and secure. Constructed entirely from steel or a steel-aluminum hybrid, these protective vessels have been most commonly used to transport goods across the world and back. Meaning, they’re made to withstand extreme weather conditions of the elements being at sea making it necessary that they are highly durable, as well as water and moisture-proof.
Use and Functionality
The use of shipping containers for transport in America began in 1956, but due to their size continued usage in ports as temporary storage. Due to the high supply and low demand of these crates coupled with the fact that it is typically more expensive to return them to their point of origin rather than constructing a new container, many shipping containers remain empty after being only used once; with more than 36 million containers worldwide, only 5-6 million are in transit daily.
Sustainability and Ingenuity
Filling the gap to repurpose and reuse the excess of 30 million containers is where we come in. Storage-unit facilities have been utilizing the opportunity to break new ground in using these versatile containers in ways different than a traditional facility. They are less maintenance than a conventional building, because they are outdoor and weather resistant. Simply put, shipping containers are quicker to build; construction of a traditional self-storage structure takes an average of 4-6 months versus 2-3 weeks. And, shipping containers hold more opportunity for ingenuity. Containers are mobile; you can move them around, replace them, and/or reconfigure them. This creates exponential potential for an ever-changing and ever-evolving space. For example, if units at one facility lease quickly enough and there is still a high demand for space, facilities have the ability to add a second level of containers rather than building another separate facility essentially doubling profits while slashing construction costs and time to find new property and staff.
We have seen clear examples in the recent past that the storage-unit market is capable of withstanding an economic low. Consider the U.S. recession of September 2008; when the National Association of Real Estate Investment Trusts All Equity Index dropped almost 40 percent, the self-storage industry returned five percent, including dividends. This is a direct result of economic consumerism; when folks have money to buy more stuff, they need more storage space for things, and when funds are low and downsizing is necessary, they need storage. So, why have we only begun to tap into this outwardly lucrative market? With almost 12 million Americans renting a storage-unit annually and over 620 thousand of those Americans renting units for more than a year at a time, the prospect of the rise of using shipping container facilities in the storage-unit business could drastically change the future of storage.
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