The Impact Of Aging Baby Boomers On The Self-Storage Industry
The baby boom generation (born between 1946 and 1964) is largely credited with the genesis of the modern self-storage industry. Baby boomers’ propensity for consumption of flavor-of-the-month goods created a need to store possessions that fell out of favor or grew too large for their available space.
“We’ve shopped ourselves to death,” admits Anne Ballard, president
of marketing, training, and developmental services for Universal Storage Group
and a card-carrying baby boomer.
boomers led the sexual revolution and, perhaps not coincidentally, the rise in
the divorce rate. Mobility has been the hallmark of boomers as they frequently
changed residences to pursue better paying jobs or to move up to larger houses
that would grow to the sky in valuation.
these experiences fed the storage industry as boomers became an outsized
presence in the market, requiring a temporary place to store their items while
they moved onto their next adventure.
now the youngest boomers are AARP members, while the oldest are well into
retirement. As aging boomers acquire fewer goods and alter their lifestyles,
the question for self-storage is: Will this generation of super consumers
continue to feed demand for the industry’s products going forward?
estimated that 10,000 boomers turn 65 years old every day and are projected to
do so until 2030, when all baby boomers will have reached retirement age. This
phenomenon, sometimes referred to as a “Silver Tsunami,” will expand the size
of the older population so that by 2030, one in every five residents will be 65
or older, up from one in seven in 2014, according to the U.S. Census Bureau.
shift toward an increasingly older population is expected to endure, according
to the Census Bureau.
statistics show that in 1964, the last year of the baby boom, that generation’s
population had reached 72 million. The size of the baby boom population continued
to increase between 1965 and 1999, peaking at 78.8 million due to immigration
of boomer age individuals into the United States.
baby boom population has been decreasing since 1999; by 2030, when the baby
boomers will be between 66 and 84 years old, that number is projected to drop
to 60 million as mortality takes its toll.
baby boom cohort will experience a substantial decline in the coming decades,
and that pace is expected to accelerate as the baby boomers become elderly,
according to census projections.
U.S. Census Bureau Projections of the Population in the Baby Boom
to the Self Storage Association’s “Self Storage Demand Study” conducted in
2017, baby boomer and Generation X (mid-1960s
through early 1980s) customers make up the majority
of the self-storage customer base (approximately 32 percent each, representing
64 percent of national customers).
Since SSA’s study is national in scope, individual storage
companies may report differing mixes. “We have more Gen X than boomers at the moment,” reports Todd
Buese, director of revenue management and business intelligence for the William
Warren Group, which is based in Santa Monica, Calif., and operates under the
reports Generation X tenants make up 37 percent of StorQuest’s tenants, while
baby boomers and older comprise 32 percent of the operator’s tenants.
Millennials represent 23 percent of customers, compared to SSA’s national rate
of 28 percent.
USG, which reports its tenant mix based on age groups rather than by
generation, shows customers between the ages of 46 and 55 (composed primarily
of Gen X) made up 27.5 percent of its customer base, while 21.7 percent were
age 56 to 65 (composed entirely of boomers) and 14.6 percent were over age 65
(representing a mix of boomers and Greatest Generation).
data is significant for Ballard because it reveals that storage users are
getting progressively older.
I am seeing is about 10 years ago, the predominant age group was 36- to 45-year-olds,”
Ballard says. “That has changed now; it is the 46- to 55-year-olds who are the
predominant storage customers. Over 65 was 14.6 percent and, in years past,
over 65 was just a blip.”
to USG data, customers over age 46 made up 42.3 percent of storage users in
2007. That number increased to 63.8 percent in 2017.
Save Or Toss?
baby boomers remain a strong customer base for self-storage, future demand from
this generation remains in question for some. As boomers age, will they
continue to hold onto their memories and possessions or finally dispose of
them? How will downsizing affect their need for storage? Mortality is dwindling
the ranks of this generation; will boomers’ heirs continue to keep their
recent years, storage experts, as well as real estate brokers and investment
analysts, have universally proclaimed that even though boomers are aging and
becoming empty nesters, they will keep most of their possessions and put them
into storage. As boomers downsize their residences, the experts contend they
won’t have room for all their possessions and will continue to put excess goods
into storage units.
the Wall Street Journal reported last
year that future growth in the self-storage sector could be a concern as aging
baby boomers moving into smaller housing will be disposing of material items
rather than storing them.
likely will be elements of both arguments going forward, but the overwhelming
majority in the industry are banking on boomers being a strong component of
customers in the near future.
Management Services of Charlotte, N.C., reported in November that demographic
shifts are effectively driving change in commercial real estate and shaping the
future of this market.
millennials seem to get all of the focus these days, baby boomers are currently
one of the most influential generational cohorts in the marketplace,” Investor
Management Services says. “An aging population and their impending retirement
will have major implications for the commercial real estate industry. This
generation is expected to enjoy a longer lifespan than generations prior. As
such, the market (and demand) will continue to grow.”
boomers continue to downsize and move into apartments and condos, the firm
notes they will relocate to homes that are approximately half the size of their
former living space.
that doesn’t mean that they want to get rid of all their possessions when they
move into a new place,” the firm says. “Many people in this generation have
furniture, heirlooms, and belongings that they have accumulated over the years
and want to pass down to their children and grandchildren, which is where
self-storage comes in.”
echoes these sentiments. “Being a boomer myself, we have a great attachment to
things of our ancestors: mamma’s wardrobe or dining table or china,” she
asserts. “Millennials and Gen X and Y don’t have those kinds of attachments.
For us, acquiring all that stuff is too valuable to throw away. Boomers love
their stuff and pay to keep it in self-storage.”
is frequently cited as one of the leading reasons for customers to use
and movement to retirement communities will continue to create more
opportunities to attract baby boomers to our product,” says Michelle Bakva,
vice president of marketing for the William Warren Group. “There is often high
sentimental value associated with these belongings, and likely not conducive to
storing in downsized living space.”
estimates the industry can count on boomers to be key storage customers for
about 20 more years.
Nitzberg, CEO of Emeryville, Calif.-based Devon Self Storage, contends that
economics plays a deciding factor in the boomers’ decisions to use storage as
highly dependent upon an individual’s income, because once they retire and have
a fixed income, they’re going to look for ways to cut costs,” says Nitzberg, a
self-proclaimed boomer. “If you have a 5,000-square-foot house because you
raised four kids and now you move into a condo, you can’t keep all that stuff and
not all of them store it. Those with ongoing funds and plenty of capital and
they want to keep it, they’re going to stay where they are.”
plays another key role. “If you’re in the Bay Area, where housing costs are
astronomical, you’re going to have a much smaller living space; and if you have
more stuff, you’ve got to put it somewhere or get rid of it. To the extent you
want to keep it, storage is your only viable option,” Nitzberg says.
in the Midwest and non-coastal areas, where housing is more affordable, a
resident can own a much larger house and store items in the basement, attic, or
boomers’ lifestyles could significantly impact storage is in the unit sizes
they will need in the future.
to SSA, boomers gravitate to larger units and lead the 10-by-20 category (16.4
percent of boomers rent this size compared to 14.7 percent overall), and rank
second in the 10-by-10 and 10-by-15 sizes.
overwhelmingly lead the 5-by-5 or smaller category, 26.5 percent versus 15.3
have found that none of our stores can keep a 10-by-30 unit in stock; they’re
always full, especially the very few that are drive-up. They are usually the
first units sold,” Ballard says.
seeing boomers occupying the largest units as well—the average being 10-by-13,”
says William Warren’s Bakva. “The category also occupies the largest units of
any other generational category, with the largest length of stay, underscoring
the value, size, and quantity of items being stored.”
is promising for storage operators moving forward is revealed in the consuming
habits of renters who are older than baby boomers. The Greatest Generation
leads the 10-by-10 category (29.5 percent versus 22.4 percent overall) and the
10-by-15 unit size (22.7 percent versus 13.4 percent overall).
this says for optimistic self-storage professionals is that the older the
customer, the larger the size they use. SSA survey results testify to this
trend: More than half of all 10-by-10s (52.9 percent) and 41.5 percent of
10-by-15s are occupied by customers over 55.
the length-of-stay category, more than one in five storage customers (21.3
percent) rent their units for one to two years, and approximately one in four
customers (25.2 percent) stay for longer than two years, according to SSA.
deeper into the data, more than one in three tenants (35.9 percent) who rent
for one to two years, and approximately two of every three tenants (66.3
percent) who rent for longer than two years, are over age 55.
StorQuest’s length-of-stay breakdown, boomers lead the way with 19 months’
average, followed by Gen X at 15 months, and millennials at nine months.
call self-storage a lifestyle management tool, because the biggest thing
boomers like about it is it lets them put off emotional decision-making,”
Ballard says. “It lets people put that stuff in storage and not be forced to
make a decision about liquidating or distributing while they’re also dealing
with the stress of a situation. Let’s just put this stuff in storage and we’ll
figure it out later.”
declining in numbers (the boomer population is decreasing by more than one
million annually, according to some estimates), baby boomers promise to be a
continuing force for the storage industry for nearly two more decades.
boomers control over two-thirds of the disposable income in the U.S. as a
result of decades in the workforce, equity, investments, and inheritances. “This
wealth enables them to spend money on luxuries that include RVs, cars, and even
collectibles such as art, which need to be stored somewhere,” Investor
Management Services says in its report.
boomers grow past retirement age, storage facilities may need to alter some of
their services or amenities to cater to this age group. “For example,
properties with a high concentration of older renters might want to focus their
efforts on more convenience-oriented services such as professional packing and
moving assistance,” the Self-Storage
more facilities may need to comply with Americans with Disabilities Act (ADA)
standards in the future. As market demographics shift to older clientele, aging
facilities with out-of-date doors could pose injury risks to some tenants. The
prospect of ADA legal actions could require upgrades to roll-up doors and
security systems in the years ahead.
in states with high concentrations of boomers may be in the best position to
take advantage of this “Silver Tsunami”.
to Motley Fool, New England states have some of the highest concentrations of
baby boomers. In Maine, 36.8 percent of the population is composed of baby
boomers, with New Hampshire coming in a close second. Montana and Vermont also
have baby boomer concentrations greater than 35 percent.
some states noted for their large retirement communities actually have the
lowest concentrations of baby boomers. These include California, Texas,
Georgia, Arizona, and Utah. California has more baby boomers overall
(approximately nine million), but not the highest concentration.
Nielsen report found several ways boomers plan to live after retirement,
About 66 percent won’t be moving at all.
Sixty-seven percent of those moving will stay in the
Half of the boomers who move won’t stray more than 30
miles from their current home.
Forty-six percent of boomers who are moving want a
Fifty-four percent will downsize.
six million will be renting by 2020, according to Freddie Mac, and they’re
looking for affordability, amenities, less property to maintain, and a walkable
Matrix Self Storage reports among the factors driving the growth of new storage
centers in some markets is the need to accommodate a flood of retirees. Yardi
Matrix sayssmaller retiree markets,
such as Charleston, S.C., are adding storage to accommodate retiring baby
boomers, while fast-growing tertiary markets like Augusta, Ga.; Boise, Idaho;
and Colorado Springs, Colo., are playing catch-up as retirees migrate to these
boomers reach the end of their lives, this will trigger another need for
storage. Many storage owners have seen more tenants settling the estates
relatives who pass on and placing many goods and heirlooms in storage until
they can be later distributed or disposed of in an estate sale. Once again,
self-storage becomes a “lifestyle management tool,” allowing the heirs months
or even years to put off thoughts of parting with their family’s belongings.
boomers promise to be an important component of the tenant mix at most
self-storage centers and are not to be ignored in marketing efforts. Boomers
possess the most wealth, they comprise a third of tenant mixes at most
facilities, they tend to rent larger units, and they stay longer. As Father
Time catches up with boomers, this generation eventually will give up its
dominance in the storage industry, but nevertheless will be heard from for
years to come.
David Lucas is a freelance writer based in Phoenix, Arizona. He is a regular contributor to MiniCo’s various publications.