Can Self-Storage Operators Make Money With Wine Storage? First, Some Careful Considerations
Copyright 2014 by Virgo Publishing.
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Posted on: 01/06/2013



 

By Amy Fuhlman

As many self-storage owners will attest, the decision of whether to add wine storage to a facility must be considered carefully. Demographics should play a major role, but also the cost of customizing part of your facility to the unique features widely desired, even required, for wine storage.

There are two primary reasons to include wine storage as part of your self-storage operation. First, the monthly revenue per square foot can be exponentially higher than typical climate-controlled storage. Second, it broadens the market appeal and quality perception of a facility while bringing another market segment through the doors. Both are great reasons to consider this add-on service, providing your facility is in the right demographic landscape.

For the most part, wine storage is better used in major metropolitan areas. These areas tend to offer:

  • Clientele with a larger expendable income (upper-middle class)
  • Clientele who have less space for storage (often high rise/downtown dwellings)
  • Five-star restaurants or bars that lack space for wine storage
  • Wine distributors or wholesalers servicing local bars, restaurants and high-end liquor stores that need easy access to stored stock

An Urban Case Study

Consider Rick McClish, a self-storage owner and the founder of Facility Development Corp., which provides construction services throughout Northern California, Nevada and Oregon.  McClish’s urban location, Rose City Self Storage in Portland, Ore., features wine-storage lockers ranging in size from 12 to 160 cases, and walk-in storage for larger collections such as those stored by retailers, restaurants or collectors. A hospitality and tasting room, computer-controlled access, and delivery acceptance are also included.

Rose City Self Storage in Portland, Ore., features wine-storage lockers ranging in size from 12 to 160 cases.

But while Rose City passed the initial checkpoints for determining if wine storage would be a good fit for his market, a few factors affected the growth of his business. Despite all of the facility’s perks, pre-existing competition impacted his ability to rent wine-storage space.

“Unless you’re the first guy in your market with wine storage, it’s going to be a slow rental process,” says McClish, who’s seen about a 20 percent annual occupancy increase since the doors opened two years ago. He attributes much of the success to his management team’s aggressive marketing efforts. McClish created a unique website to market his wine storage, and his staff spends 20 percent of their week to promoting the service.

McClish also found that not all collectors are open to storing wine in a traditional storage facility. There was a pre-existing mindset that wine needed to be stored in a more upscale environment. His solution: The installation of French Oak-laminated wine lockers with a wood-like façade, which provide a more discerning visual appeal.

A wine-storage area at Rose City Self Storage in Portland, Ore.

The wine-storage customer base at Rose City is expanding, although it's sometimes in an unexpected manner, McClish says. A wine distributor recently toured the facility's accommodations. After viewing the standard self-storage units in the basement, he determined they held the correct temperature for wine storage and opted to rent a regular 10-by-10 space rather than pay for the more expensive wine storage, which can cost $20 to $25 more per square foot. “I didn’t see that one coming,” laughs McClish, “but I’m happy to have the rentals.”

Adding wine storage to an existing self-storage facility can bring in new customers and higher revenue per square foot than traditional self-storage. However, operators must first evaluate whether the profit center is ideal for their location, then be prepared to aggressively market the service. While wine storage continues to be a niche market, it can be well worth pursuing given the right demographics.

Amy Fuhlman manages the marketing communications programs for Janus International, a manufacturer of self-storage doors, hallway systems and building components. For more information, visit www.janusintl.com.