During the time Louisiana native Holly Perry and her family moved from one house to another in 2003, they lived for three months in a small apartment and stored their furnishings in a nearby storage unit on Bandera Road.
“Then we just kept it for Christmas decorations. … It was very convenient,” said the mother of three. “Fast-forward to about five or six years ago, and my parents downsized from a 3,000-square-foot house to a senior living apartment of about 930 square feet. They couldn’t just get rid of their stuff, so they insisted that my brother and I take it.”
That’s when she got a second storage unit, and although she’s down to only one now, it still holds not only her decorations, but also stuff like vases, candlesticks, a brass chandelier, “very uncomfortable ladder-back chairs that tip over, circa 1972,” and a Singer sewing machine base. Perry feels obligated to keep it all, and she’s not the only one.
Texans, apparently, own a lot of stuff.
That’s according to a report released in October by the CBRE Self Storage Valuation Group that looks at self-storage construction across the country. The report, for use by real estate investors and developers, showed markets in this state are projected to be oversupplied with self-storage facilities by 2018.
The Texas Self-Storage Association (TSSA) lists about 750 facilities in Bexar County – a tally CBRE considered just about right for the number of households here. But that was then.
Research firm STR reports there are a total of 33 currently in development – potentially creating an oversupply – a metaphorical twist not lost on those who rely on storage for their own oversupply of stuff.
Tom Brundage owns 23 self-storage facilities in San Antonio, with three more in development. His father built one of the first such facilities in the city in the late 1960s at Interstate 10 and DeZavala Road.
Now a growing segment of commercial real estate in the post-recession era, self-storage is a $3 billion industry. The Self Storage Association‘s (SSA) most recent study of consumer demand showed almost 48 million self-storage renters in the nation’s Southern region, which includes Texas. About half are temporary renters, and 43 percent are long-term.
“We are also seeing increased demand in those markets impacted by the recent and historic hurricanes,” said Christian Sonne, an executive vice president at CBRE. “Self-storage provides comfort for those who need to move belongings that could potentially be in harm’s way to a facility for safekeeping.”
CBRE estimates that 600 facilities were constructed nationwide in 2016, and another 900 started last year. Average facility size is increasing as well. Dallas came in as the most oversupplied city in Texas, with 2.81 square feet of storage per person.
Dallas was the location of the A&E cable network’s popular Storage Wars spinoff, Storage Wars Texas, in 2011. The show focused on four Dallas storage hunters who bid on items being auctioned off from storage units whose renters had defaulted. A reported 4.1 million viewers watched the premiere episode to see if the bidders would win untold treasures or a storage unit full of worthless junk.
About half of all self-storage renters are women, like Perry, and most live in a single-family house, according to the SSA Demand Study. It’s no surprise that many renters are military service members and families, again like Perry, and students who relocate often.
So what’s behind all those locked storage doors?
Christmas and holiday decorations are the top stored item for 47 percent of people in Southern states. Also high on the list are furniture, photos, paintings, kitchenware, and clothing, according to the consumer demand study, items that people don’t have space at home or stuff they’re storing because they’re between residences. A small percentage of storage renters report actually paying to stash stuff they no longer need or want.
In newlywed Jessica Liskey’s case, the stuff mostly belongs to her husband, Tony: extra furniture they didn’t need when they combined households, plus a canoe, old college textbooks and, of course, holiday decorations. They keep the goods at Noah’s Ark Self Storage on Stone Oak Parkway.
Others use storage to keep inherited items after a death and some while remodeling a residence. Four to five percent are using temporary storage following a natural disaster.
In the days after Hurricane Harvey struck the Texas Coast, several self-storage operators in Houston offered 30 days of space free to those affected by the storm.
Small-business owners also use self-storage. At the Store It All Storage on General McMullen Drive in San Antonio, where the 1,300 units of varying sizes are at 89 percent occupancy, Property Manager Alma Aranda said most units contain household items. “But we do have people who work out of the unit, for example, construction workers or flea market dealers who store their stuff here,” she said.
“We used to say self-storage is demand based on lifestyle stages,” Sonne said. “But it’s increasingly becoming part of the American lifestyle, people storing emotional memories. I have storage myself and my crap looks like everybody else’s, but it’s my stuff. That’s part of the reason the length of stay [in a storage unit] is increasing. It’s now close to 18 months.”
Market conditions are good for investors in self storage, according to the commercial real estate research firm. The Self Storage Valuation Group of CBRE evaluates conditions using an econometric model that takes into account occupancy levels – if it’s below 80 percent, that’s a good indication of oversupply – existing supply, population, percentage of renters, average household income, and size.
STR data shows that San Antonio’s net rentable square feet is at 76 percent occupancy.
For self-storage operators, however, oversupply isn’t a problem unless the growth is near the property they own. Two-thirds of a facility’s tenants are people who live within three miles of the property.
Mark Skeans, president of Skeans Development & Management, has seen occupancy rates at his facilities drop slightly as more units have been constructed in the area lately.
“It just means we have to be more cautious about site elections, better at customer service, and always build with an exit strategy in mind,” said Skeans, who has owned and developed self-storage facilities for 18 years.
However, he said the greatest impact to his profit margins are rising property taxes. In the last five years, one unimproved facility has gone from $50,000 in annual taxes to $182,000. “We filed suit against Bexar County two months ago,” he said. “I can’t raise my tenants’ rents by whatever percent that is, so it’s coming out of the bottom line.”
Brundage, too, said that rising property taxes, combined with ever-increasing competition from what he called “merchant developers” – those building for real estate investment trusts – is making it harder for him to want to develop here.
“Though [our report] showed San Antonio was going to be about equilibrium, it’s now leaning toward oversupply,” Sonne said. “The danger is that it tends to create rate wars. Income tends to decrease for facilities that are competing for tenants, and they do that by lowering rates.”
Self-storage contracts are not leases, like an apartment, so an owner can increase the rental rate at any time. Even as rates increase, customers are less likely to move their stuff when the rent goes up.
Self-storage facilities are most common in suburban and rural areas where land is cheaper. But demand for self-storage in urban areas is growing as young people move to the city centers, home sizes shrink, and the supply of downtown facilities remains limited. In some cities, developers are turning old industrial buildings into storage, but it’s difficult and expensive to do, Sonne said.
Like it or not, Perry is stuck with storage for the time being. “My mom gets all freaked out and cries if I mention getting rid of anything she gave us, so I feel guilty and keep it,” she said.