It’s All for Rent
My wife and I recently celebrated our 40th anniversary and by anyone’s standard, a worthy mark to properly commemorate. We decided that we wanted to organize a family trip with kids and grandkids to message the importance of this long-lasting union. We thought a trip to Sedona would be a perfect adventure with its natural beauty, art, recreation, and reasonable proximity.
The planning began with a search for an Airbnb to house all of us under one roof. This was followed by the many varied logistics ranging from necessary equipment for the grand babies, coordination of dog care, food planning, all to be highlighted with the orchestration of a special night out to include adventure, food, wine, and music. I envisioned a remote pop-up outdoor dining experience, backdropped against the mountains, allowing for a night of storytelling, toasting and listening to music.
Given the itinerary, we deployed our adult children to aid in the planning. Instinctively they explored varied websites and apps that could serve our needs with the world of renting anything from anyone unfolding before my eyes. Websites like BabyQuip, Fat Llama, Rent Anything Store, or Brevvie (which stands for Briefly Rent Everything for a Better Life) provided immediate access to cribs, strollers, highchairs, kiddie pool, generator, fire pit, twinkle lights, hiking equipment, and the list went on.
While each website described themselves differently, the summary spoke to an established peer-to-peer rental marketplace allowing members to share and monetize their unused possessions coupled with the added benefit of creating a healthier and more sustainable planet. In fact, many industries and governments encourage the reusing and reselling of products and their ultimate recycling.
No doubt the shifts within real estate housing and automobile leasing have given us the optionality and acceptance of renting vs owning with its associated economic and lifestyle benefits. The renting model today is not just limited to the higher ticket items, but every imaginable day-to-day product with the realization that temporary or short-term access is satisfactory enough. Capital outlay, changing tastes, product evolution and sustainability all factor into this new consumption decision tree.
Gen Xers, Millennials, and now Zillennials are becoming the largest buying segment of this expanded economy as these generations favor sharing and renting over traditional ownership models. These generational consumers like the attributes of a circular economy and a shift from ownership to access as an alternative to buying even low-cost items. Be it everyday clothing to formal wear, jewelry or designer handbags, bikes, cameras, tools, appliances and even pet rentals for therapeutic or temporary companionship reasons, the growing list of products and services is limited only to the consumers’ imagination.
The Brevvie site has taken it a step further by providing an added approach to this renter model by utilizing lockers or a mini storage within individual apartment communities allowing for tenant’s to then trade or rent products within their greater association.
At Buchanan, we regularly discuss the many macro demographic, geographic, and economic influences that have and will continue to affect real estate usage. While location, pricing and prudent capitalization is vital to a successful real estate investment, equally important is following the changing needs and tastes of the varied customers that real estate supports. Our own self-storage business has further affirmed and benefitted from these paradigm shifts as the renter society has contributed in multiple ways to the continued advancement of the asset class with current usership approaching approximately 12% of the population.
Historically, self-storage construction has followed apartment development aligning with tenant storage needs. Renters move more frequently than homeowners and it is estimated that 40-50% of self-storage demand comes from the regularity of the population moving as tenants need space during times of transition. Additionally, the multifamily rental market has utilized self-storage given the smaller living options compared to residential homes. Self-storage is generally more cost efficient than multifamily or industrial rents on a per square foot basis, so consumers have learned to utilize storage as a replacement to an extra bedroom, closet, attic, or garage.
The rise of new business verticals within e-commerce (as we utilized in the planning of our anniversary celebration) has directly resulted in an increased penetration of business customers to the self-storage space. These tenants do not need or cannot afford large warehouse space and want the flexibility of month-to-month leases, with storage options near their home, office, or place of distribution.
In recognition of self-storage’s expanding tenant profile and proxy as a pseudo retail store for the burgeoning online rental space, the industry continues to progress in its use of varied automated tools to enhance its operational efficiencies. This is best exemplified by the streamlining of the online, no-contact rental leasing experience (brought to us by covid) and the use of a revenue management systems to remove any friction from the leasing and renewal process. And to support self-storage’s customization to reflect tenant demand, the industry has expanded its stereotypical suburban single-story facility to provide for an urban infill multistory product. This allows for a smaller average unit size for varied tenant requirements such as multifamily renters.
The self-storage asset class continues to benefit from a diversified and growing tenant base as consumers recognize the pricing and convenience advantages to the outsourcing of their business or personal storage needs. While the renting of everything imaginable certainly has its attributes in allowing for maximum flexibility and optionality, there are of course limitations and challenges, as some people will always value ownership and the control it provides. However, our anniversary celebration would not have come together as seamlessly and ideally as it did, without these new online products and service resources. All the needed accoutrement for our family’s special night together out in the desert under the stars was… all for rent.