Real estate investors looking for high demand, low-start-up investment often have to look no further than their daily commute. It may feel like there’s a self-storage facility every few miles along your route. That perception matches the industry’s rapid growth and widespread demand.
The basic demand driver behind the self-storage industry is simple — people have more things than space. For real estate investors, that has created one of the fastest-growing and most resilient sectors in commercial real estate.
Demand Drives Rapid Growth in Self-Storage
Many of life’s complex problems are solved, at least temporarily, by renting a self-storage unit. Downsizing after the kids leave but not ready to part with everything? Temporarily living with family while going through a divorce? Living in a hotel while your home is being repaired after a tornado? SpareFoot found that one in three Americans ultimately turns to self‑storage during moments just like these, using it as a temporary but essential way to bridge life’s transitions — though temporary has a funny way of becoming extended.
Driven by steady, year-round demand, the self-storage industry has become an increasingly attractive opportunity for real estate investors. The industry consists of about 8,800 companies that employ 60,600 workers and generate $21 billion annually. More than 37% of self-storage space is controlled by the top five firms, four of which are real estate investment trusts: Extra Space Storage, Public Storage, CubeSmart, and National Storage Affiliates Trust. The fifth, U-Haul, is a publicly traded holding company. U.S. Self-Storage Industry Statistics [UPDATED 2025]
Self-Storage Provides Solid ROI for Real Estate Investors
Real estate investors looking for a business opportunity that relies on functional space, recurring demand and low startup costs are often drawn to the self-storage industry. Because of the relatively predictable recurring monthly revenue and low margins, investors often see a solid return on investment. Self-storage also offers opportunities for scaling those real estate investments relatively easily. Investors can purchase multiple sites for their portfolios and then use a third-party management group to handle the day-to-day operations for a relatively hands-off income stream.
Most importantly, owning and running a self-storage business does not depend on having specialized experience in the industry, making it an attractive first business or add-on business for investors. While there are costs associated with start-up, a self-storage business does not require ongoing product purchasin, like a retail store or restaurant does, which lowers the ongoing costs as well as the risk for owners.
Once the building is purchased or rented, security and climate control—which are often key to success—are a top priority. Customers’ top priority is the safety of their belongings, so the facility needs to instill a sense that their belongings will be protected. Even after investing in state-of-the-art surveillance systems and locks, as well as heating and cooling systems, the build-out costs are still at the lower end overall.
For many owners, the business has very low labor costs to balance out the security and utility costs. Most businesses operate with a small maintenance staff and a front desk representative to handle calls and visits from active and prospective customers. As a national average, self-storage facilities employ 7 full-time employees, which keeps labor costs low. Because customers driving past the facility are often the biggest business traffic driver, self-storage businesses need only limited marketing—often just good outdoor signage and a strong local social media presence.
Self-storage helps investors who are also investing in other types of properties, such as apartments, retail space, and office space, diversify their real estate assets. Because self-storage is less dependent on market conditions, the investment helps level out other more cyclical investments. With Real Estate Investment Trusts (REITs) increasingly investing in self-storage, investors can also add self-storage to their portfolio through REITs.
Why Self-Storage Customers Rarely Leave
For real estate investors, one of the most attractive aspects of the self-storage business is the sticky nature of demand. In addition to self-storage having a high and often endless demand, short-term customers often stay for the long haul. On the surface, renting a storage unit appears inexpensive, especially with aggressive move-in promotions and discounted introductory rates. Many customers sign leases believing the arrangement will only be temporary.
But once a tenant fills a unit, economics and psychology begin to shift. Moving items out requires time, effort, and often another place to store them. Customers must either downsize their belongings, reorganize their living situation, or make difficult decisions about what to keep and what to discard. As a result, many tenants simply continue paying the monthly bill rather than solving the larger problem.
This dynamic creates a highly durable revenue stream for self-storage operators and real estate investors. Even after promotional pricing expires and rates increase, customers often remain in place because the inconvenience of moving out outweighs the additional monthly cost. For investors, this translates into longer tenant stays, recurring cash flow, and pricing power that few other real estate sectors can consistently replicate.
Impact of Self-Storage Facilities on the Community
Because communities are often not as open and welcoming to self-storage facilities as they are to other types of businesses, real estate investors in the industry should understand and consider the impact on their community. Unlike businesses such as boutiques and breweries, which foster community and add to the perceived value of an area, self-storage facilities are neutral at best—and often viewed as a negative, often making it hard to get permits or be accepted by the local residents. One neighborhood group even fought the permit for a self-storage facility to be built in Omaha City all the way to the Supreme Court, claiming the business would hurt property values.
While the low labor requirement is a plus for owners and real estate investors in terms of cost and administration, communities often point to this as a negative. Unlike other businesses, self-storage facilities bring very few new jobs to an area. On the other hand, the lack of foot traffic and low employee count brings less traffic to the area than retailers or restaurants—a benefit many communities overlook.
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Self-storage addresses the gap between what people own and where they can put it. Critics argue it reinforces a consumerism mindset and encourages accumulating belongings. But from the investor’s point of view, self-storage businesses deliver clear benefits for customers, operators, and real estate investors and offers convenience, recurring revenue, and relatively stable demand. By capitalizing on the demand and low risk, real estate investors are increasingly finding that self-storage offers a strong, reliable, long-term investment.
This material has been prepared for informational purposes only, and is not intended to provide or be relied upon for legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.
