influx of residential units and an increased demand for self-storage.
A LOCAL LENS Regional employment, income, and population statistics all play a critical role when determining whether a self-storage facility will be viable; however, they do not provide the complete picture. An area may boast strong economic growth but have a saturated self-storage market. Or the population may be booming, but a particular site could lack the visibility it needs to be successful. While some markets may check every box on your list, others outperform in some and flag in others. Once you understand regional positioning, local housing and employment trends can provide a more focused lens. New housing may directly translate to increased demand for storage, especially when developers concentrate on smaller apartment units that will leave residents short on space. According to the Self Storage Association, one in 10 Americans currently rent a storage unit, a clear sign the market is not slowing down. By contextualizing regional demographics with a deep knowledge of local market dynamics, you can determine whether your self-storage facility can help fill the growing demand. In doing so, you can build a business plan that will withstand the volatility of today’s economic landscape. •
THE TEXAS TRIANGLE There is a reason that 13 Spartan Investment Group portfolio properties are located in Texas. Its population is bested only by California. From July 2018 to July 2019, Texas added more residents than any other state. During the pandemic, people flocked to its four largest metropolitan areas: Austin, Dallas–Fort Worth, Houston, and San Antonio. Austin can claim the most substantial economic growth of any metropolitan area in the country, and its net migration rate is among the highest in the U.S. Strong migration trends indicate that a market is actively attracting new people, thereby increasing demand for goods and services. A quickly growing population exacerbates storage demand, especially where competition for housing is high. In the next five years, Houston is projected to outpace most metropolitan areas in population growth. In 2021, the city reached record numbers for job growth, sending unemployment back to pre-pandemic levels. Stable local employment is arguably the most significant factor in establishing whether a market can maintain its vitality and growth. As home to an array of Fortune 500 companies, including ExxonMobil and American Airlines, and as a regional hub for financial services, information technology, telecommunications, transportation and defense, Dallas– Fort Worth is one of the most diverse economies in the nation. San Antonio, meanwhile, has one of the highest concentrations of military facilities in the United States. Although military bases do not typically match the rapid job growth of the private sector, they offer a steady source of employment and a near-constant influx of transplants.
KANSAS CITY, MO-KS AND WICHITA, KS The gross domestic product (GDP) of Kansas City is more than $142.5 billion, having grown by nearly 40% in the last decade. The median income in the region has skyrocketed
during the past 20 years. This is thanks, in part, to the major
companies with headquarters in the city. These include American Century Investments, Garmin, and one of the largest freight shipping companies in the world, YRC Worldwide. Southwest of Kansas City, Wichita is the No. 1 aerospace manufacturing metro in the U.S. and recently secured the top spot for digital service job growth. The presence of major employers in the health care industry and military means it boasts steady employment rates and population growth. As Wichita’s downtown undergoes a major $1.5 billion renovation, expect to see an
Ryan Gibson is the president, chief investment officer, and co-founder of Colorado-based Spartan Investment Group, a privately held real estate
investment firm specializing in self-storage. He is responsible for investor relations and capital raises for projects. Gibson has organized more than $200 million of private equity for Spartan and has extensive experience managing the development of Spartan projects in challenging markets. To connect with Gibson directly, email ryan@spartan-investors.com.
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