The Wall Street Journal reports that there are currently 2.3 billion square feet of self-storage space in the U.S., which equates to approximately 7 square feet for each person in the United States. This includes the 8.9 million square feet added in 2012 and 16.5 million square feet expected to be available by the end of 2013. The downturn in the U.S. economy created a growth spurt within the self-storage industry among college students, densely populated city dwellers, shortage in demand, and households making do with the space they have instead of adding-on to their existing residences.
According to documents filed with the United States Securities and Exchange Commission (SEC), Public Storage, the nation’s largest self-storage company, had 2,078 facilities in 38 states within the U.S. and 189 storage facilities in 7 western European nations. Not only is Public Storage large, but also profitable and growing. The company grew its top line 4.9% and 4.5% year-over-year in each of the past two years. Bottom line growth increased 12.2% and 9.4% respectively during the same periods. More impressive were the rent and occupancy rates. Public storage is nearing 92% occupancy on facilities open 13 months or longer with available square foot rent equaling $12.38, approximately the same as rental apartments within the same communities as its facilities. At the same time, the Wall Street Journal reports that self-storage facilities cost approximately $25 – $40 per square foot to build for a single story structure and from $42 to $70 a square ft. for a multiple story structure. Compare that to apartments that start at a low end of $130 a square ft. to over $1,000 per square ft. for high-rise structures in costlier cities. Public Storage’s financial results are not unlike the other publicly traded companies in the self-storage industry.
Given the strong demand for the product, one would expect communities to embrace the industry. However, in some situations, this is not the case. These communities are forgetting that, although self-storage facilities only create a few jobs, these are local residents that are employed. We believe it is optimal when you can add jobs to the local economy and fill them with local workers. Most importantly, self-storage facilities satisfy a demand of the community. Residents need a place to store their items. This is increasingly common resulting from the covenants of homeowner associations (HOA). HOAs place restrictions on the type of sheds and storage facilities that can be erected on a property. Residents, in turn, look to local self-storage sites to offset these limitations. This allows the goals of the HOA which are to maintain uniformity and higher property values to be achieved. When some municipalities have required that self-storage facilities build the exterior of their structures to appear to be office buildings, hotels, or some other more ascetically appealing structure in order to receive local zoning approval, the industry has complied. The industry is taking the necessary efforts to not only provide a needed service, but also be a good neighbor.
The self-storage industry is becoming so well known that the A&E Television Network has created the television show Storage Wars, currently in its 4th season. Who knew that a 10ft x 20ft storage unit could be so exciting?