Possibilities for investors are evolving along with retail real estate. What used to be an electronics store or fashion boutique might now be your next best asset.
The buying habits of consumers has permanently changed. Business landlords and builders are looking at how to best use current square footage as online shopping continues to cross over and retail footprints get shorter. Introducing self-storage, an asset class that flourishes at a junction of flexibility and necessity.
Market Trends Driving This Evolution
Growth in life transitions: The demand for personal storage is being fueled by relocation to cities, restructuring, and working from home.
Demand surpasses supply: New building from the ground up often falls shy of consumer demand in major cities. Delivery to market is facilitated by retail repurposing.
Experience-driven retailing: Self-storage is a constant and complimentary tenant to gyms, offices, and specialized grocers in malls, which are changing and becoming mixed-use destinations.
Strategic Investor Considerations
Diversification of the portfolio: Conversions from retail to storage maintain prime real estate while reducing exposure to unpredictable consumer markets.
Brand differentiation: In order to appeal to an emerging class of storage users, forward-thinking operators are combining technology with aesthetics through online leasing, service concierges, and mobile access.
Exit potential: Financial institutions and REITs seeking income-producing properties in widely recognized corridors are taking attention of these hybrid-use structures.
Final Thought
The shift from retail to storage is an important shift in how we use space, rather than a trend that developed throughout the pandemic. Investors are placing themselves at the forefront of a profitable and logical growth for commercial real estate by recognizing the long-term opportunities of adaptive reuse.