How Different Generations Drive Self Storage Demand
Different generations are utilizing self storage in different ways as they make major lifestyle changes.
Image by Valeriia Svitlini from Unsplash
The self-storage sector has become one of the surest bets for commercial real estate investors. Even in an economic downturn or during major demographic shifts, self-storage assets can thrive.
Relocation is one of the major demand drivers for self storage, followed by downsizing and the simple need for more space at home. The pandemic accelerated these trends and made them more conspicuous, prompting people — from Gen Z to Millennials and Baby Boomers —to turn to storage as they made lifestyle changes.
According to a survey conducted by StorageCafe, around 38% of Americans use or plan to use self storage in the future. While moving, downsizing, or not having enough space are some of the major demand drivers, each generation has a different motive behind turning to storage units as an extension of their homes. Below, we examine how various age groups drive the need for self storage based on lifestyles and needs.
Baby Boomers
Baby Boomers are currently the second-largest living adult population in the U.S., encompassing roughly 70 million people between the ages of 58 and 76, the Insider Intelligence reported. Most Baby Boomers have already retired and are making significant lifestyle changes out of choice or necessity.
With the growing senior housing market providing upscale care for residents, Baby Boomers aged 65 or above often relocate to independent or assisted living units, storing many items in storage units. Others simply move in with their children to either receive care or provide help with grandchildren. Another popular lifestyle choice among Boomers is moving to a state with a favorable tax climate and opportunities for recreational activities.
Generation X
Gen X is expected to make up around 19.3% of the U.S. population in 2022, equating to around 65.1 million individuals. While this population cohort is smaller and less contested than Baby Boomers or Millennials, Gen Xers are avid self-storage users. StorageCafe found that Gen Xers are most likely to be self-storage renters among all generations. This might be because Gen Xers have above-average household incomes. Consequently, they also spend more and have more belongings.
Many from this generation are also going through lifestyle changes. As more and more Gen Xers become empty nesters, downsizing and moving to a smaller home is a popular option. Additionally, empty nesters often alter their lifestyles to care for aging parents.
Millennials
Millennials have been the largest generation in the U.S. since 2019. This cohort includes 72.1 million individuals born between 1981 and 1996, according to Pew Research Center. Millennials are known for living in urban centers with roommates and delaying household formation, the pandemic has changed things for many.
Millennials, along with Gen Z, were the most likely to relocate from major urban areas to suburbs or to lower-cost cities across the Sun Belt. The shift to remote work has accelerated relocation trends and provided Millennials with the opportunity to move to larger homes and start forming families. As the largest population cohort and major drivers of the U.S. economy, Millennials are expected to become the most active storage users.
Generation Z
Gen Z, the third-largest population cohort, will make up more than 20% of the U.S. population in 2022. That's around 68.2 million young adults. As Gen Zers are mostly in their college years and live in dorms or student housing, they have limited space for storage. Many students rely on storage units during the summer if they vacate their college bedrooms.
Moreover, the pandemic revealed that — similarly to Millennials — Gen Zers are open to moving to a different city to pursue their preferred lifestyle choices. This generates demand for storage units.
Final Thoughts
The self-storage sector’s unprecedented growth in recent years is reflected by the most popular demographic trends: downsizing Baby Boomers and Gen Xers, Millennials flocking to the suburbs for family formation, and Gen Z dealing with early adulthood. While industry experts predict market fundamentals will moderate in the near future, traditional demand drivers will continue to fuel the growth of the sector.
Related Questions
What are the differences in self-storage demand between Baby Boomers and Millennials?
Baby Boomers are more likely to downsize their living space or move in with family during a recession, while Millennials are more likely to rent self-storage space for their belongings. According to a survey by SelfStorage.org, Baby Boomers are more likely to use self-storage for long-term storage, while Millennials are more likely to use it for short-term storage. Millennials are also more likely to use self-storage for business purposes, such as storing inventory or equipment.
How has the rise of the sharing economy impacted self-storage demand?
The sharing economy has had a mixed impact on self-storage demand. On the one hand, it has made it easier for people to access items they need without having to purchase them, which could reduce the need for self-storage. On the other hand, the sharing economy has also made it easier for people to move around and travel, which could increase the need for self-storage. For example, people may need to store their belongings while they are away on a trip. Additionally, the sharing economy has made it easier for people to start businesses, which could also increase the need for self-storage.
For more information, see The Four D's of Self Storage.
What are the key factors driving self-storage demand among Gen Xers?
Gen Xers are increasingly turning to self-storage for a variety of reasons. The "Four Ds of Self Storage" are death, divorce, dislocation, and downsizing. Downsizing and dislocation are key factors driving self-storage demand among Gen Xers, as they are more likely to downsize their living space or move to a different location to pursue job opportunities. Additionally, deaths and divorces are relatively constant, and can create demand for self-storage at least temporarily, but often for the longer term.
It's also important to consider the level of competition within the chosen market radius. If there are already a lot of self-storage facilities nearby, it may be harder to attract new tenants than if there were very few options available. It’s also important to consider whether there are any facilities under construction or in the planning stages, as those can affect the property in the future.
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How has the growth of the gig economy impacted self-storage demand?
The gig economy has had a positive impact on self-storage demand. As more people become freelancers, entrepreneurs, and independent contractors, they often need a place to store their equipment and materials. Self-storage facilities provide a convenient and affordable solution for these individuals. According to a report from the Self Storage Association, the gig economy has increased the demand for self-storage units, as more people are looking for short-term storage solutions. Additionally, the report states that the gig economy has also increased the demand for self-storage units from businesses, as they often need to store materials and equipment for short-term projects.
What are the most important considerations for self-storage operators when targeting different generations?
When targeting different generations, self-storage operators should consider the following:
- The needs of each generation: Different generations have different needs when it comes to self-storage. For example, millennials may be more interested in convenience and technology, while baby boomers may be more interested in security and customer service.
- The location: Different generations may prefer different locations. For example, millennials may prefer urban locations, while baby boomers may prefer suburban locations.
- The amenities: Different generations may prefer different amenities. For example, millennials may prefer amenities such as climate control and 24-hour access, while baby boomers may prefer amenities such as on-site management and security cameras.
- The pricing: Different generations may prefer different pricing models. For example, millennials may prefer flexible pricing models, while baby boomers may prefer fixed pricing models.
For more information, please see this article.
How can self-storage operators best market their services to different generations?
Self-storage operators can best market their services to different generations by understanding the needs and preferences of each generation. For example, millennials may be more likely to use online services and digital marketing, while baby boomers may prefer more traditional methods such as print advertising and direct mail. Additionally, millennials may be more likely to use self-storage for short-term needs, while baby boomers may be more likely to use it for long-term storage. Understanding the needs and preferences of each generation can help self-storage operators create targeted marketing campaigns that will be more effective in reaching their target audience.
For more information on marketing to different generations, check out this article from SelfStorage.com.