With heightened demand and consistent profitability, investing in self-storage real estate can be a great way to generate an impressive return on investment.
Here, we’ll take an in-depth look into which markets are most promising for investors interested in participating in the self-storage game.
We’ll assess rental yields, compare self-storage for sale and self-storage for lease, and explore what factors make these locations profitable so that readers know exactly how they should approach their own investments.
Overview of Self-Storage Investment Opportunities in 2023
In 2023, investing in self-storage may present promising opportunities for those pursuing special purpose real estate investments. Investors will find rental yields that are attractive, depending on the specific market involved: GlobeNewswire reports that regional analysts expect 7.5% growth in the self-storage market between 2023 and 2028.
When evaluating potential investments, carefully consider the particulars of a given self-storage market and review both past performance and current trends. Markets with ample population growth, limited competition, favorable regulations, and low vacancy rates are likely to have the best prospects for success in 2023.
It’s also important to assess what services or amenities can be offered by an investment property in order to make it more appealing to renters. For example, drive-up units, climate-controlled units, and other amenities may be attractive to customers.
Additionally, investors should consider whether self-storage investments will be for sale or for lease. Self-storage investments for sale can offer more control and potentially provide a larger return on investment, but the initial capital commitment may be much greater than for self-storage investments for lease.
Our Top 5 Markets for Self-Storage Investments in 2023
With the demand for self-storage at an all-time high, investors who want a piece of the action should look no further than these top 5 markets for self-storage investments.
Here are some cities that our research has shown are ideal for investing in self-storage in no particular order based on recent market data.
#1 – Dallas, TX
Investing in the self-storage market in Dallas could be a great opportunity for savvy entrepreneurs. In February 2023, the average cost of a 10×10 unit was $116, which is around $10 cheaper per month than the national average.
Several neighborhoods offer great deals with lower average rates, such as Las Palmas ($92/mo), Lochwood ($102/mo), and Kleberg ($105/mo). Westmoreland Village and Walnut Hills/Encino Hills are other areas offering appealing rates at $106 and $108, respectively.
#2 – Austin, TX
The Austin storage market has also seen steady growth in recent years. As of February 2023, the average cost of a 10×10 unit was $119/mo, making it just slightly more expensive than Dallas’s ($116).
Austin’s population is constantly growing while new high-density residential opportunities might provide limited space. That makes Austin a great opportunity for self-storage investors.
#3 – Denver, CO
The Mile High City has been on the rise in recent years, and so have its self-storage opportunities. At an average cost of $132/mo for a 10×10 unit, it’s the first on our list to surpass the national average of $126.
It’s worth noting, though, that Denver has dipped below the national average from time to time like it did in April of 2020.
#4 – San Antonio, TX
San Antonio is another notable city for self-storage investments. The average rate for a 10×10 unit is only $112/mo, which is well below the national average.
The area also has high population growth and job opportunities that make it a great place to invest in self-storage: San Antonio’s population grew immensely between 2021 and 2022, according to recently released data from the U.S. Census Bureau.
#5 – Oklahoma City, OK
Oklahoma City is another excellent market for self-storage investments. With an extremely low average cost of $78/mo in February 2023, it’s the cheapest on our list. And, with its low cost of living, high-quality jobs, and strong job growth, Oklahoma City is an attractive option for businesses looking to expand their operations.
Oklahoma City also has a population that’s set to grow exponentially in the next few years. Now could be an ideal time to get in on this market and capitalize on fresh demand for its self-storage units.
These metropolises offer investment benefits, such as higher rental yields, compared to other major markets and well-developed infrastructure. What’s more: They’re experiencing rapid population growth thanks to flourishing job markets, many of which are technology-related.
These factors make them great candidates for potential investors looking to gain entry into the lucrative self-storage market.
Advice for Investors Entering the Self-Storage Real Estate Market
If you are considering entering the self-storage real estate market, here are some key points to keep in mind:
- Conduct research on potential areas to invest in. Look into the projected rental yields and other economic indicators of the area.
- Determine if it is an area that is seeing steady growth. Nail down what it is about the market that makes it successful.
- Make sure that any investment you make has a solid foundation built upon good data. When it comes down to making decisions, use data to inform your decision-making process.
Investing in self-storage presents an incredible opportunity for both novice and experienced investors looking to maximize potential returns. However, as with any investment decision, it’s important to research markets, rental yield trends, and other factors before investing.
