Three major publications have all written about the virtues of starting a self storage business in the last year. All of them tell their readers that it is a good time to invest in self storage, precisely because the self storage industry is a hidden cash cow. It’s good money…here are the articles, side by side.
Inc. Places Self Storage as Tenth in “Best Industries for Starting a Business in 2010”
With American families continuing to buy and buy more stuff over the years, the need for self-storage is also growing, and the self-storage industry is ready to meet this demand. By 2010, almost 2.2 billion square feet worth of storage space was available, enough for the entire country’s population to stand in and have 7 square feet of space to himself.
90 percent of all self-storage businesses are currently owned by independent businessmen and has grown to become a $22 billion industry even despite the economic downshift caused by the subprime mortgage crisis.
WSJ.com Notes Continuing Growth of Self-Storage Industry despite Foreclosures
Foreclosures have had an effect on the self-storage industry but instead of negatively, it seems more and more people have taken to self-storage units to stash their valuables as the need to downsize becomes greater.
In Detroit, the effect on foreclosures have been very apparent – rent for self-storage units per occupied square foot became cheaper while overall rentals increased by 18%.
Nearly 1 in 10 American households have at one point rented a self-storage unit in 2007, which translates to a gross revenue of $22.1 billion for the whole industry.
Entrepreneur Highlights Backyard Storage Sheds as Opportune Business
Most are not aware of the opportunity behind building and installing backyard sheds for additional storage in homes. Sheds are a cost-effective way for households to gain more storage space without the need to get plans or permits from your local government. This space can either be used for a home workshop, art studio, crafts room or guest room, or even just as additional storage.
These shed kits can be prepared for homeowners to buy and install themselves or it can be built in an industrial space and then delivered to the home ready to use.
Knowledge and equipment needed to build these storage sheds is very minimal but the profit potential is massive. Even advertising the business is simple – just build an elaborate sample shed on a high-traffic part of your town with business signs and contact numbers.
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#10 on Inc.’s list of “The Best Industries for Starting a Business In 2010″
There are already 2.2 billion square feet of self-storage in this country, according to the Self Storage Association.
That translates to more than 7 square feet of storage per U.S. resident. But the industry is far from saturated, thanks to the insatiable appetite of American families for acquiring stuff.
The $22 billion industry also has low barriers to entry, which helps explain why independent business people own 90 percent of self-storage companies.
The subprime mortgage crisis wasn’t so hard on the storage business.
Percentage of self-storage companies owned by entrepreneurs, according to the Self Storage Association: 90
Expected growth in 2009 revenue for “storage and warehouse leasing,” according to IBISWorld: 2.5 percent
Expected annual industry revenue increase growth rate in the four years to 2014, according to IBISWorld: 3.3 percent
Percent of Americans that could stand in U.S. self storage facilities at the same time:100
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As foreclosures and tightening budgets lead people to downsize their living spaces, some folks are moving their valuables into self-storage facilities.
Charles Ray Wilson, president of Self Storage Data Services Inc., says the self-storage industry should continue on its “smooth road of solid performance considering its strong fundamentals.” His research company, which tracks self-storage trends, says rent per occupied square foot of self-storage in Detroit — one of the nation’s softest real estate markets as measured by home foreclosures — hit bottom in the fourth quarter of 2006, but rent for self-storage has since increased 18%.
The self-storage market nationally is, however, starting to show signs of weakness due in part to the prolonged housing crisis and deteriorating economy. Third quarter rent per occupied square foot declined 3% nationwide. Declining home sales pose a risk to the self-storage industry, says Wilson, because “fewer sales translate to few moves, and it’s the moves that create the demand for storage.”
Chances are you or someone you know has used self-storage at some point — nearly one in 10 U.S. households currently rents a self-storage unit, according to the Self Storage Association, an industry trade group. Primary self-storage facility gross revenue for 2007 was about $22.1 billion, says the Self Storage Association.
Public Storage’s spokesperson Clemente Teng says demand for self-storage business is driven by such life events as a divorce or junior moving back home to mom and dad.
That said, rising foreclosures have benefited self-storage companies. “Maybe your ARM reset and you have to give up your condo but don’t want to throw out your huge plasma TV. You store it for $75 a month instead,” says Paula Poskon, senior research analyst at financial service firm Robert W. Baird & Co. Poskon says most consumers who use self-storage believe their circumstances are short-term and solvable.
If you do have something to store, now might be a good time to do it, as many storage companies are offering deals to attract new business. Public Storage, for example, is offering a deal where new renters pay $1 for the first month of their contracts. U-Store-It and Extra Space Storage both have Internet specials offering the first month rent free based on unit availability and other conditions.
Public Storage’s average new customer typically stores goods for about 8 months. The price consumers pay per square foot of storage varies by factors such as the location of the unit (storing in NYC is probably going to cost you), the unit size and its features (such as climate control). Teng said the most common storage size for his company is a 10×10 unit with an average price of $1.50 per square foot.
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Building and installing backyard storage sheds is a little known business that generates gigantic profits for the owners of these businesses.
Sheds are an affordable method for a homeowner to add additional storage space, workshop space, an art studio, or guest accommodations to a home without having to get plans and permits from local government.
Working from a small industrial space you can build shed kits for homeowners to buy and install, or you can build the sheds in a controlled environment and transport them to the site to install for the purchasers.
The business only requires basic construction knowledge and equipment to implement, and the profits that can be generated are outstanding.
An elaborate sample shed can be built and displayed in a high-traffic area in your community with proper signs identifying your business.
This type of advertising and promotion would be an excellent way to gain attention and attract new customers.
If you need more information about Scott Meyers® or investing in Self Storage or how to start a business in storage, contact our office at scott@selfstorageinvesting.com