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Keeping track of the economy is critical.
If you know what you're looking for, you can often reliably forecast shifts in your market based on certain economic markers. This allows you to make better plans for your own business. It lets you better discern where to spend your money—or if you should even be spending it.
Join us for this Gabfocus Spotlight, where John Chang of Marcus & Millichap explains his views on the most important economic marker for self storage operators to keep track of.
Question: "What is the most important economic marker an operator should be keeping up with?"
Check out the video clip below to hear their answers:
In this Gabfocus Session: State of the Industry 2023, John Chang of Marcus & Millichap joined us to discuss the state of the economy and of the self storage industry. He took us on a walk through everything from potential recession to rental trends among millennials.
Check out the full Session to dive deeper!
One of the things about that I always track is absorption.
Absorption is tied to household formation. If you graph absorption of self storage space next to household formation, you will see that there's a strong correlation. Okay?
Now, if you take household formation and you graph it against consumer sentiment, there's a correlation. So the University of Michigan consumer sentiment index that comes out every month is the one indicator that I would be watching right now. Because it just bottomed out. Last year, it reflected inflation.
People got scared, and household formation dropped like a rock when consumer sentiment dropped.
Now we've seen it start to bounce back. And what it does in 2023 will tell us a lot about the demand for self storage space going forward into the year.
So if you're tracking one thing as a self storage investor right now, and this isn't always the case, it's not always the best indicator, but right now, I would be watching that consumer sentiment index out of the University of Michigan."