Kenneth Volk Jr. knew an opportunity when he saw it.

It was 1972, and the real estate developer was visiting a small storage facility in Houston.

Self-storage was a new concept back then… But Volk was shocked when he learned the facility had a long waiting list of customers hoping to find a place for their belongings.

In Texas of all places – where there was cheap, open land for miles.

Building a storage facility was relatively simple. It was just four walls, a roof, and a bunch of roll-up doors. Add a fence and some lights for security. Put it in a convenient spot – say, next to a freeway – and he too could have customers lining up to rent what amounted to a small garage.

So Volk called up his friend B. Wayne Hughes, and they each put down $25,000 to launch the new business.

“No. 1,” as they called it, opened in El Cajon, California.

Their first customer was a distributor for STP Motor Oil. His wife had gotten fed up with the oil cans stashed on their driveway and insisted they “had to be gone.”

Volk and Hughes planned to keep building storage facilities until they stopped filling up. But 2,900 facilities and 50 years later, their company is still growing and shows no sign of stopping.

Today, Public Storage (PSA) is one of the largest owners of self-storage facilities around the world.

Here at Wide Moat Research, we’re always searching for opportunities to invest in companies with a solid history of growth and a long runway for the future.

Today, we’ll tell you how self-storage fits that bill. It’s a trend that’s set for a major comeback. And we’ll share how you can profit from a unique self-storage model.

Demand Remains Steady, Even Through Recessions

The simple business model of renting space for storage is surprisingly resilient, even when the economy isn’t doing great.

You see, people generally turn to storage facilities for four reasons: divorce, death, dislocation, or disaster. They’re unavoidable, regardless of what the economy is doing.

These unfortunate situations often mean clearing out homes. And anything people can’t bear to throw away ends up in storage. That means steady demand for storage facilities, even during recessions.

Although the self-storage concept has been around for more than half a century, the industry remains fragmented with many small mom-and-pop owners that operate just a handful of locations.

That leaves an attractive opportunity for self-storage real estate investment trusts (REITs). These specialized REITs grow by buying up smaller rivals and using their increased scale and lower cost of capital to improve profitability.

Despite the opportunity for constructing new storage facilities, growth in supply remains low. That means existing properties with good real estate in convenient locations can keep charging higher prices.

The COVID-19 pandemic led to an unexpected surge in demand for storage, as people cleared out space in their houses to make room for home offices.

But as demand normalizes, the self-storage sector has seen a huge selloff and is now trading at valuations not seen in many years.

That presents a great opportunity for some of the strongest self-storage REIT names out there.

A Unique Opportunity

This is a rare opportunity to invest in these recession-resistant businesses at attractive prices.

Aside from Public Storage, some of the largest self-storage REITs include:

• Extra Space Storage (EXR), which owns or operates 2,096 locations across the U.S. It’s the second-largest owner of self-storage units (1.5 million) in the country.

• CubeSmart (CUBE), a REIT that owns, operates, acquires, and develops more than 1,200 self-storage facilities.

• Life Storage (LSI), another REIT that operates hundreds of self-storage facilities in the country. It also offers climate-controlled and dehumidified units, large units for boats and cars, and advanced security.

• And National Storage Affiliates (NSA), which operates over 200 self-storage centers in Australia and New Zealand.

The self-storage market is expected to grow 5.8% annually over the next five years. So if you’re interested in getting exposure to this long-term trend at an attractive price, consider looking into the recession-resilient companies that own the real estate: the best self-storage REITs in the space.

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Happy SWAN (sleep well at night) investing,

Brad Thomas
Editor, Intelligent Income Daily