Episode 270: Why Specialty Storage May Define the Next Decade

Big Announcer (00:03):
 This is the Self Storage Podcast with the original self-storage expert, Scott Meyers.

Scott Meyers (00:11):
 Hello everyone and welcome back to the Self-Storage Podcast. I’m your host, Scott Meyers, and I’m coming to you from Italy and not from my studio. So if the audio or video isn’t quite what you’re used to, well, that’s the reason why. We’re currently staying in Tuscany. Absolutely incredible. But over the past several days, we’ve covered a lot of ground. We spent three days in Rome, walked through history at the Vatican, stood inside St. Peter’s Basilica, explored the Colosseum. Then we made our way up to Florence, one of the most beautiful cities in the world. We’re visiting the Leaning Tower of Pisa and we’ve driven through medieval towns that are so perfectly preserved. It feels like you stepped back literally 500 years. And today we’re heading to Maranello, which if you’re a car guy like me, you know it is a Formula One mecca, the Ferrari factory and museum.

(00:55):
 So this is what I’d call an in-between episode, but I had to record this because I noticed something here that directly impacts our business, or at least I wanted to see if it did, because here’s the observation. Here in Europe, most of Europe, and especially Italy, space is limited. People need storage no matter what, no matter where. And when you walk through these towns, the streets are narrow, the buildings are old, apartments are smaller. There are no three-car garages. There are no giant suburban homes with basements and attics packed full of stuff. People live just tighter, more efficiently. And yet they still accumulate things because we’re humans. They still run businesses. They still travel. They still need space, which immediately made me think, okay, no surprise. Storage works everywhere. It’s not just an American phenomenon, it’s a human behavior. But then I wanted to see the correlation.

(01:43):
 As always, I want to get to the stats because I’m always conscious of where the U.S. market may be heading. So I wanted to put some numbers behind this and thought I’d share it with you because this is where it gets interesting. In the U.S., as we know, depending upon the data gathering source, you see there are roughly 65,000-plus self-storage facilities, again, give or take, that equals about nine to 10 square feet per person. And roughly one in 10 Americans use self-storage. I mean, that number has been about the same for many, many years now. Now compare that to Italy, and Italy has fewer than 2,000 facilities total at about 0.2 to 0.3 square feet per person. So let me say that again. The U.S. has about 10 square feet per person per capita. Italy has less than one square foot per person per capita.

(02:29):
 Now, that’s not a small difference. That’s a massive gap. So here’s a key question that I’m asking myself and that is a consideration as we move forward in the U.S. Is that because Italians don’t need storage and have evolved, if you will, or is it because the market hasn’t caught up yet? Because as I’m walking through these cities, I’m seeing, again, small apartments, dense populations, growing businesses, tourism-driven economies, lots of luggage storage everywhere we go and zero extra space. So is it a formula that points to self-storage demand and where it’s heading here in Italy as it is evolving, or is the U.S. market moving toward what other parts of the world are already seeing? So are we really looking at a lack of need or a lack of supply? So let’s shift back to the U.S. for a second because here’s where it gets interesting.

(03:22):
 And another question that I’ve been asking right now is are we becoming more minimalist? Always wanting to look a little further down the road to see where we’re heading and do we have this insatiable demand so we continue to develop at the pace that we’ve been developing for years and is it sustainable? Are younger generations owning less stuff? Well, we’ve seen that a little bit and the bigger question is, well, is self-storage going away, which I’ve heard a couple of prognosticators talk about, but I don’t see that. Does it mean that I’m blind to it? But that’s why we’re asking these questions and digging into the stats and history. Well, the answer is younger generations owning less stuff doesn’t mean that storage is going away, but there is a shift that is happening and we’re definitely seeing that. First of all, younger generations, they prefer experiences over possessions.

(04:07):
 They’re delaying homeownership. They’re living in smaller urban spaces and are more mobile. They’re moving more frequently. We’ve seen that accelerate, especially after COVID or during COVID and after. But here’s what people miss. Mobility creates demand for storage. It doesn’t reduce it. And Americans are more mobile, more mobile than Europeans, more mobile than Italians. So think about it. Moving between cities, that creates a demand for storage, always has. Downsizing temporarily, that creates a demand for storage. Living in apartments, that creates a demand for storage. Running side hustles or small businesses, that creates a demand for storage. And here’s what the data shows. Urban storage demand is actually increasing in the U.S. Smaller unit sizes are becoming more popular. So that is a trend that we are mindful of. And climate-controlled units are still growing the fastest, which means that they’re replacing these good, nice items that they would have in their home or apartment and sending them to self-storage like an extra bedroom rather than just junk that doesn’t need to be temperature-controlled and just putting it away because we don’t know what to do with it.

(05:10):
 And customers in the U.S. are using storage more frequently but for shorter durations. So the model isn’t dying in the U.S. It’s just simply evolving. And that’s where the biggest opportunity is right now that we’ve been seeing and that we’ve been talking about. So storage is no longer just rows of 10-by-10 units. We are seeing a major shift toward specialized storage. And we’ve been seeing and making a lot of noise in the industry about this recently if you’ve been listening to this podcast or paying attention to what we’re doing on YouTube. Take boat and RV storage for number one. People are buying fewer houses. They’re buying more lifestyle assets, boats, RVs, trailers, and they need places to store them. The sector is exploding as a matter of fact. And then we go to flex space and small businesses are driving huge demand for flex space.

(05:58):
 And that means contractors who are hanging their shingle out and starting their own businesses, e-commerce sellers who are either expanding or also starting their own businesses, many service providers as we see a more fragmented service economy. They don’t just need storage. They need a workspace. They need a small office and they need distribution all in one place and you really can’t find it except for these specialized storage facilities that we have been actively building. And that’s where flex space comes in. So as we look then now and expand into industrial outdoor storage, which we’ve been involved in for the past 20 years, as a matter of fact, it’s now becoming one of the hottest asset classes. It’s been right under our noses. We’ve been doing this for quite a while, but now it is becoming an asset class on its own. So I think equipment yards, truck parking, which is primarily what we’ve done in the past, container storage, which we do as well, and think more importantly, low overhead, high demand, and very limited supply.

(06:53):
 And so yes, the puck is moving in that direction as well. And now we’re also seeing secure storage. So small vaults, as they call it here in Italy and other parts of Europe, or safe-deposit boxes. We’re even seeing expansion into document storage, high-value item storage, and these small secure vaults because we’re seeing that banks are moving away from the safe-deposit box mostly because they’re moving away from retail and they don’t want people in their locations. Doesn’t mean that they don’t want them in there, but they’re reducing the retail locations of banks and therefore the safe and secure vaults and safe-deposit boxes that we’ve seen and known in the past, while they’re going away as the banks have been providing for years and now they’re moving into the private sector because trust and security are really becoming premium services these days.

(07:40):
 So the big takeaway is this. Self-storage isn’t shrinking in the U.S. It’s expanding into multiple verticals and the operators who understand this shift, that’s you, StorageNation, who are paying attention to what we’re talking about here and watching what we’re doing, are the ones who are going to dominate in the next decade. Now, if you’re listening to this and you’re thinking, okay, I get it. I see the opportunity. It’s happening around me right now. I am one of those customers. Well, then I want to personally invite you to the Commercial Storage Summit to do a deeper dive into this. This is happening online June 4th through the 6th. Yes, this is an online event and I have brought together the best operators in the country in all of these verticals, all of the forms of commercial storage to be at this one three-day event.

(08:26):
 We’re not just talking about traditional self-storage. We’re breaking down boat and RV storage, flex and hybrid facilities, storage condos, industrial outdoor storage, storage vaults, and other forms of specialty storage in the commercial sector. And you’re going to hear directly from the people who are building these facilities, scaling them and profiting from them right now. Not theory, not outdated strategies, but what is actually working today. So we’re going to show you where the demand is shifting, what types of facilities are outperforming, how to find and fund these deals, and then how to position yourself for the next wave of growth. And we’re starting it all, launching it all on the first day on June 4th with an AI workshop that shows you exactly how we are implementing and utilizing AI in these specialty areas of self-storage. So if you’ve been sitting on the sidelines or if you’re already in self-storage but you know you need to evolve, this is the room you need to be in.

(09:20):
 So go right now to click on selfstorageacademy.com. That is selfstorageacademy.com and get registered because this isn’t just another webinar. This is a roadmap for where the industry is going. So as I wrap this up from here in Tuscany, getting ready to head to Ferrari today, here’s the thought I want to leave you with. Opportunity doesn’t always show up where it’s obvious. Sometimes it shows up when you step outside of your normal environments. I know that happens for me as I step out and begin to look at storage because I’m a junkie all over the world. It’s just you see something differently. And so for me, it was walking through these towns and asking the question yet again, is the need for self-storage universal? And if so, in what ways? And is the supply just not available and there’s a demand everywhere for it? Or is there a shift in how humans behave that relates to storage?

(10:12):
 And where there’s a gap, there’s opportunity and the opportunity is in the shift in the U.S. to specialized storage. All right, appreciate you tuning in to this in-between episode and we will be back in the studio very soon. But until then, take what you learned today and go out and put it into action. So folks, this has been an incredible opportunity for us and a great time to be able to share this with you. So for now, this is Scott Meyers with the Self Storage Podcast, signing off from Tuscany, Italy. We’ll see you on the next one.

Big Announcer (10:46):
 Hey, gang. Wait. Three things before you leave. First, don’t forget to follow the Self Storage Podcast and turn on your notifications so you never miss another episode. And while you’re there, please leave us a five-star review if you like the show. Second, be sure to share your favorite episodes and more via Instagram and don’t forget to tag us. And lastly, head to the links in the show description and hit follow on Twitter and Facebook to get a front row seat with the original self-storage expert, Scott Meyers.