Denver Self Storage Market Statistics:

Which factors underpin the local boom of self storage development in the past few years?

I feel that we are seeing demand for the product grow exponentially due to changing demographics, higher usership, and the US housing shortage, along with smaller houses. I also feel the business model of the month-to-month leases, no or very little ongoing capital requirements and a direct-to-customer business model is very compelling today with inflationary concerns.

It is also worth noting that we have seen more and more institutional equity entering the space — this will drive more development as the returns for self storage developments have come down meaningfully.

Where does local demand for self storage come from?

Demand is mainly driven by population growth within the submarket. Life events such as retirement, divorce, remolding, displacement, relocation, or death all create self storage demand. However, we are finding that the younger generations are using self storage at a much greater pace than previous generations. So, I believe demand is being driven by increased users of the product.

What major economic events affected the self storage industry in Denver?

Denver is no different than the rest of the country. The consensus is that the industry continues to benefit from new demand drivers due to the changes to life/work/school environments, new demographic spending habits of millennials, longer tenancy, slower than normal deliveries of new developments, and a stickier tenant base. This has led to all-time high occupancy and revenue growth, further fueling investors' appetites for self storage assets.

How do you envision the future of the local self storage industry, in the medium- and long-term?

Investors continue to look at self storage as a reliable and resilient income stream, and our business model of month-to-month leases proves to be a very compelling inflation hedge. However, one cannot ignore the recent market volatility and threat of rising interest rates. I am concerned that the self storage industry will be impacted or derailed by an outside factor, such as loan defaults in other asset classes affecting the banks' ability to continue to offer debt to the self storage sector, or a black swan event such as the pandemic — but this time it might not benefit our industry. In my 25+ year real estate career I have learned that only the paranoid survive.