The Question Investors Keep Asking
Every time headlines turn toward slowing growth, inflation, or market volatility, one investment theme comes back into focus: what assets hold up when the economy softens? For many, self-storage lands high on that list. But is it truly recession-proof, or better understood as recession-resistant?
The truth is more nuanced. Self-storage has consistently outperformed many commercial real estate sectors during downturns, but like any investment, it carries risks. Here’s what the data shows, and what investors should consider today.
Recession Resistance vs. Recession Proof
The term “recession-proof” gets thrown around casually, but few assets can claim that title. Self-storage earns its reputation because it tends to remain in demand when people’s circumstances shift, whether that’s downsizing, relocating, or adjusting to financial pressure. Analysts often frame the sector as “recession resistant” rather than bulletproof.
How Self-Storage Performed in Past Downturns
The Great Recession (2008–2009)
While most commercial real estate sectors suffered deep declines in occupancy and rental income, self-storage proved more durable. Public REIT data shows storage facilities maintained stronger revenue and outperformed office, retail, and hospitality in total returns during the financial crisis .
The COVID-19 Shock (2020)
Self-storage again demonstrated durability when the pandemic reshaped household and business needs overnight. Demand for flexible, short-term space spiked as people relocated, small businesses adapted, and consumers sought extra room at home.
Together, these case studies reinforce the idea that storage demand often grows, not shrinks, when people are in transition.
Why Self Storage Holds Up
Industry insiders sometimes call them the “5 D’s”: death, divorce, dislocation, downsizing, and disaster. Each represents a moment when individuals or businesses need space quickly, often regardless of economic conditions.
For investors, that means demand is not purely cyclical like in retail or office, it’s event-driven, with needs arising in good times and bad.
Operational Advantages in a Downturn
Beyond demand resilience, self-storage has structural features that help stabilize returns:
- Low Operating Costs: Minimal staffing and maintenance needs compared to other CRE sectors .
- High NOI Margins: Facilities often run with net operating income margins north of 60%.
- Flexible Leases: Month-to-month contracts allow operators to adjust rates quickly in response to market shifts .
- Fragmented Tenants: With hundreds of small renters rather than one anchor tenant, vacancy risk is spread across a large base.
Risks Investors Should Still Weigh
No asset class is immune to cycles. For self-storage, the biggest risks in a recessionary climate include:
- Oversupply in Saturated Markets: Too much new construction can pressure rents and occupancy .
- Interest Rate Sensitivity: Rising rates affect financing costs and deal flow.
- Local Economic Shocks: Even defensive demand drivers can’t offset extreme regional downturns.
What This Means for Investors Today
So, is self-storage recession-proof? Not exactly. But the evidence shows it consistently outperforms other real estate sectors during downturns. For investors seeking to diversify into hard assets with reliable cash flow, self-storage deserves serious consideration.
At Dahn, we’ve spent more than 40 years navigating cycles, acquiring and managing facilities that balance strong demand fundamentals with careful market selection. That’s how we’ve built a track record of delivering reliable, long-term returns, even when broader conditions look uncertain.
Ready to Start Planning Your Next Investment?
Thinking about adding self-storage to your portfolio? Partner with a team whose decades of experience turn market cycles into opportunities. Schedule a call with our team or reach out with a question today to learn more about current opportunities and how this adaptive sector could support your long-term goals.
