As 2023 comes to a close, the team at Forge likes to reflect on the past year and make our customers aware of new laws in store for 2024. Overall, the self storage industry continues to demonstrate exceptional performance as a prominent commercial real estate sector and emerging as one of the nation’s top investment categories. Occupancy rates have remained steady at around 90% throughout the latter half of 2022, and this pattern continued with minimal variation throughout 20231. More and more people are taking advantage of self storage facilities due to the high cost of housing in densely populated areas of the country coupled with the increased frequency with which they must relocate.
So, what laws should self storage investors and owners be aware of?
One bipartisan group of House members is set to finalize a bill to upgrade and expand access to outdoor recreation areas across the nation. If signed, the bill would add more fuel to the fire for developing RV and boat storage facilities. Currently, there is still a large demand for this form of storage.
The EXPLORE Act is comprehensive in its efforts to improve Americans’ outdoor experiences. It will direct a variety of government agencies, like the Forest Service, the Interior Department, and the Bureau of Land Management to produce meaningful changes to our outdoor areas. One such improvement is modernizing campgrounds through better broadband connectivity and digital park passes, bolstered by private-public partnerships. These improvements will bolster our country’s recreation industry, which produced nearly $1.1 trillion in economic activity and supported roughly 5 million jobs in 2022. It will also bolster RV and boat storage growth 2.
The Self Storage Association is also tackling several initiatives including addressing two common concerns for storage operators. First, what to do when paying tenants are told to move out but fail to do so; and second, how to ensure that a tenant is bound by a rental agreement that he refuses to sign.
Several states already address these concerns in laws applicable to residential or commercial landlords. The SSA is pursuing legislation to address one or both concerns in Georgia, Kansas, Maine, Utah, and Virginia.
They are also looking at reforms to provide greater clarity on how to deal with trespassers who store personal items or vehicles without permission, towing of vehicles for non-monetary violations of the rental agreement, and disposal of low-value property without a lien sale (as is already permitted by a handful of states) 3.
In the state of California, Governor Newsom signed a bill that becomes effective January 1, 2024, which might be able to reduce the number of newspaper advertisements you have to run before a lien sale.
Specifically, a new option has been added to allow you to run an advertisement “once in a newspaper of general circulation published in the public notice district where the sale is to be held or in the county where the self-storage facility is located, and once on any publicly accessible internet website that customarily conducts or advertises online auctions or sales.” The online advertisement must remain online for Seven (7) days before the sale 4.”
There are several important implications to this change, not the least of which is you must choose the right place to post this “alternative second advertisement.” Further, please note the requirement to include a listing of the contents of the unit in your advertisement has been removed. There are many other changes made and nuances to AB-542. It is always advisable to consult with your California legal counsel to review and understand how you can potentially enjoy the benefits of reducing your physical newspaper advertising to one time per sale.
The need for self storage is expected to continue to rise as individuals choose to rent for more extended periods or opt not to sell their current homes, resulting in a shortage of space. Additionally, self storage construction has also notably increased over the past several years and is expected to continue as the demand for personal and business storage continues to grow. With these new laws and new initiatives, 2024 is predicted to be another growth year for self storage. Cheers to the new year!
References
1. Matthews Real Estate Investment Services. (2023, September 18). Retrieved from matthews.com: https://www.matthews.com/self-storage-market-report-northeast/
2. Stern, B. (2023, December 11). Toy Storage Nation. Retrieved from toystoragenation.com: https://toystoragenation.com/2023/12/11/new-bill-would-improve-outdoor-experience-across-america-bolster-rv-and-boat-storage-development/
3. Doherty, J. (2023, December). SSA Magazine. Retrieved from SSA Magazine: https://cloud.3dissue.com/132457/132608/155202/2023-December-SSAMagazine/index.html?page=10&_ga=2.185880489.1264725417.1701897973-44071511.1701897973
4. Self Storage Legal. (2023, December 6). Retrieved from selfstoragelegal.com: http://www.selfstoragelegal.com/2023/12/06/california-self-storage-statute-updated/
5. McLeod, A. (2022, June 23). Inside Self Storage. Retrieved from Insideselfstorage.com: https://www.insideselfstorage.com/market-conditions/can-self-storage-performance-strength-last-here-s-an-outlook-for-the-rest-of-2022
