7 Big Questions and Answers About Buying Warehouse and Storage Facility Businesses
Warehouses and storage facilities may not be the most glamorous or exciting businesses to own, but there are many reasons why they deserve serious consideration. These businesses have consistently proven to be successful for many investors, which is a great reason to browse through listings to find a storage facility or warehouse for sale.
If you’re new to the industry, we’re here to give you the answers to some of your biggest questions.
How big is the industry?
The industry has alluring statistics for aspiring entrepreneurs. According to the Bureau of Labor Statistics, there were more than 70,000 storage facilities and warehouses in the United States in 2018. This accounts for more than 60,000 business employing over 150,000 people. Suffice to say, this industry is not going anywhere anytime soon.
Is the industry growing? Where?
The industry is growing due to a trend of people moving out of rural areas and into cities. Many young people move to cities seeking better academic and economic opportunities. As cities grow and become increasingly crowded, citizens start to seek out different options to keep track of all their possessions.
Michael Stoll, economist and public policy professor at the University of California, Los Angeles partnered with United Van Lines to study data collected on U.S. migration patterns. According to Stoll, “This year’s data reflects longer-term trends of movement to the western and southern states, especially to those where housing costs are relatively lower, climates are more temperate and job growth has been at or above the national average, among other factors. We’re also seeing continued migration to the Pacific Northwest and Mountain West as young professionals and retirees leave California.”
Who uses warehouses and storage facilities the most?
Consumer demand for warehouses and storage facilities is broad and very diverse. This could include families relocating from one part of the country to the other, college students going to school in a different state and coming back home for the summer, or hikers set on climbing mountains and not wanting to lug their gear everywhere. As the world gets busier, there doesn’t seem to be a slowdown in the number of material goods Americans are accumulating. As such, the demand seems to be on-going and quite rapid.
Are these businesses recession-proof?
Warehouses and storage facilities are nearly recession-resistant. Regardless of the performance of the economy, there will be a steadfast need for storage space and demand for renters. In a good economy, people will overspend and need more space to store their belongings. During the downturn of the economy, people will generally downsize, including their home goods. Rather than sell or donate all their possessions, they will look to temporarily store them until they’re back on their feet.
How can I earn profits with a warehouse or self-storage business?
First, since you own a real property, you are earning equity over time. As the real estate market goes up, so does the value of your property. Second, as you continue to attract tenants and keep your property occupied, the rent you collect will provide a steady stream of recurring revenue. As demand for rental spaces goes up, this is an opportunity to increase your tenant’s monthly rent accordingly.
There are also tax advantages. Warehouses and storage facilities allow you to get the tax breaks commonly associated with commercial real estate, such as low property taxes. Furthermore, storage facilities and storage spaces are a class of real estate that are built to generate income from the start.
Is there a way for me to attract more business and stand out from my competitors?
Attracting more customers is all about adding value to your business and meeting your customer’s needs. A person using a storage space will likely need moving materials, such as boxes and tape, and equipment, such as dollies and hand trucks. By providing these, you can charge more for your services and improve the business brand.
An additional income channel can open up if you provide storage for larger items, such as boats or RVs - things that are generally slightly more difficult to store.
How can I buy a warehouse or storage facility?
You can get started by browsing warehouse and storage facilities listed for sale on BizBuySell.com. Many sellers are even willing to carry part of the financing. There are also other options to lighten the load, such as finding a business partner or investors, who can even be friends or family.
Buying a business is a lifestyle change that can help you become your own boss, give you the freedom to run your business how you choose and be present in your life. Warehouses and storage facilities are great, stable businesses to invest in and with a little research and help, you can become a business owner!
Sources:
Harris, Alexander. “Self-Storage Industry Statistics.” The SpareFoot Storage Beat, 11 Mar. 2019, www.sparefoot.com/self-storage/news/1432-self-storage-industry-statistics/.
Sisson, Patrick. “How Warehouses for Personal Junk Became a $38 Billion Industry.” Curbed, Curbed, 27 Mar. 2018, www.curbed.com/2018/3/27/17168088/cheap-storage-warehouse-self-storage-real-estate.
Quarterly Census of Employment and Wages. “About the Warehousing and Storage Subsector.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, 16 Aug. 2019, www.bls.gov/iag/tgs/iag493.htm#earnings.
“2017 National Movers Study.” 2017 National Movers Study | United Van Lines' 41st Annual Movers Study, 2017, www.unitedvanlines.com/contact-united/news/movers-study-2017.