Self-storage is one of the strongest segments of the U.S. real estate market. The storage industry generates $35 billion a year, and one in five Americans use storage facilities to store their belongings. However, the industry has not yet reached its peak, and there is one trend that promises to increase its reach: the subdivision of buildings into self-contained units.
This reconfiguration of storages marketing does not imply the replacement of one type of target investor by another, but constitutes a market innovation. In other words, a strategy whereby a business introduces a novelty that allows new segments to be incorporated. The possibility of acquiring storage units and scaling the investment progressively increases the segment's alternatives in terms of costs and, therefore, favors its expansion.
Another of the characteristics that make the consolidation of this model possible is its high degree of standardization. Condo-storage generates products that function similarly to a commodity: storage units are serialized assets, practically identical to each other and combinable. This makes them easy-income and easy-out goods, since, unlike other real estate properties, their commercialization depends on their objective utility and not on their subjective attractiveness. So much so that, on many occasions, those who acquire these properties do not consider it necessary to meet them in person before buying them.
Moreover, like commodities, self-storage is increasingly chosen by investors seeking to build diversified portfolios. In contexts of financial volatility, strategies such as those proposed by the Yale endowment model, according to which a successful portfolio should allocate at least 20% to alternative assets, gain relevance. Various calculations indicate that this formula can double the returns of traditional portfolios.
Condo-storage has even proven to have the capacity to generate even higher profits than those offered by US Treasury bonds, an asset historically chosen by those who wish to minimize risks and ensure profits. For example, the storage units marketed by the company BAS Storage, owned by the Argentine businessman Marcos Victorica, generated more than twice the profit in a ten-year period than those produced by such bonds in the same period.
Victorica himself, who will be present at Expo Real Estate Argentina, argues that one of the keys to the success of this industry lies in its dependence on production growth, rather than population growth. As long as the US remains one of the most productive countries in the world, it will continue to generate a surplus that needs to be stored, and the self-storage business will continue its upward trajectory. Storage facilities are deeply rooted in American culture, as necessary for the country as airports and highways.
The condo-storage not only represents a reconfiguration within the sector, but also a new range of possibilities for the modern investor.
Source: Ambito
Marcos Victorica is Founder and CEO of BAS STORAGE.
Company that is revolutionizing the American real estate market by creating a product based on the American economic infrastructure.