ST. LOUIS – America, home of the free and land of self-storage.
Of all the self-storage in all the world, more than 75 percent of it is in the United States. There are nearly 50,000 self-storage facilities in the United States. The rest of the world has about 15,000 combined, according to the Self Storage Association.
Demand for self-storage is most often attributed to four major life events that the industry calls “the four Ds”: divorce, death, downsizing or dislocation (i.e. job loss).
“The big driver is change,” said Brad Schwer of Morningstar Equity Research. “In one way or another, people are looking for stability.”
The U.S. has an estimated 2.6 billion square feet of self-storage, according to the Self Storage Association. That’s about 8.1 square feet per person, and that’s growing.
“We’re not sure how long this trend will last. We think maybe we’re at the top of the bell curve,” said Mike Blackett, a senior vice president with the Alexandria, Va.-based trade group. “But the demand is there, and facilities are expanding, so you will see some price wars, competition and see who’s left standing.”
When a steady income or residence is elusive, leasing storage space for possessions can provide peace of mind, said Beau Reinberg, co-owner of the 10-year-old W-Ave Storage facility in downtown St. Louis and the just-opened Extra Space Storage outside the city.
The reality is that most people rent storage longer than they expect, overvalue the items inside and rarely shop for better pricing elsewhere once their belongings have been stored.
Schwer, the analyst, called the success of retaining self-storage customers “stickiness.” That viscous quality helped establish the sector.
“You couldn’t be in a better property sector from 2011 to 2015,” said David Rogers, the chief executive of Life Storage. Now growth is slower, but there are still opportunities.
The vast majority of self-storage facilities are mom-and-pop shops, but corporate mega-businesses are fighting for a bigger share of the business. Life Storage has 700 properties nationwide.
Once upon a time, self-storage consisted of sketchy properties on the outskirts of town with dubious security. Now, it has become integrated into communities. The buildings are nicer, year-round climate control is standard, there’s personnel on-site, security is sophisticated and payments are automated.
But the factors that make self-storage great for investors are not always appealing to communities. Each facility typically employs only two or three people. They generate minuscule traffic, which is not great for nearby retailers or neighborhoods that want to appear lively.
Schwer called self-storage smart for investors, but when asked if it was smart for customers, he said. “It’s a good business to be in.”
The reason it’s a good business is because there’s a low bar for entry and the industry has proved that you can raise rents by 5 to 10 percent every eight to 10 months or so, and customers will stay. Most are on auto payments, Schwer said, and the incremental increases aren’t typically enough to spark a reaction.
Clutter-clearing professionals have a different perspective on “good.”
Sue Anderson of Simplified Living Solutions Inc. said, “People are always ‘gonna do something’ with the stuff. But what they are doing is avoiding reality.”
Others suggest an element of willful delusion about the precious cargo in self-storage.
“Amazon, eBay and Craigslist have made it easier to accumulate more faster ... They have also nurtured thousands of forms of niche consumption,” said Heidi Aronson Kolk, a cultural historian in the American Culture Studies program at Washington University in St. Louis.
“Much of what we put into storage is of uncertain value,” she said via e-mail. “EBay and ‘Antiques Roadshow’ have taught us that it will probably be worth something someday.”
But Anderson said, “It’s just a storage full of delayed decision.”