March 1, 2001

6 Min Read
Self-Storage Fact vs. Fiction

Self-Storage Fact vs. Fiction

By Kevin Howard

There is an old joke about a boy whose teacher assigns him the task ofexplaining the difference between theory and reality. I have faced this dilemmamany times in the self- storage business, and often found theory and realitydon't match.

When I started in this business in 1977, the theory supported at the time wasthat the prime users of storage were apartment dwellers. The theory seemed tomake sense. Apartments were being built on a smaller scale with no storage orgarages, while people were becoming more materialistic and needed a place tostore their surplus items. For years, I would look for locations near apartmentsand gear advertising toward their residents.

Testing Theories

In 1984, I put the apartment theory to the test. At the time, I was managing53 self-storage properties in Washington and Oregon. A survey of more than13,000 tenants revealed 52 percent of our renters were homeowners. This amazedme. I began making test calls and soon discovered the storage "fact" Ihad been quoting since 1977 was, in reality, a fiction.

Renters said that although they owned homes with a garage, they more utilizedthe space to store things with sentimental value, such as grandma's rockingchair, an old dresser or a dining-room table. Garages were also filled withthings of practical value, such as seasonal items and sports equipment. Theprime motivator for securing storage was the woman of the house, while thehusband signed the lease and did the moving. Annual surveys since 1986 revealhomeowners continue to be our primary customers.

In the mid- to late-1980s, I was faced with another theory vs. reality in theself-storage business. After hearing and repeating the fact, "We have afive- to seven-mile marketing radius around our storage facility," Iregarded it as true. In 1988, when I used several facilities for a randomsampling, I discovered it to be another falsehood. We took five samplefacilities, plotted all their existing tenants on a census map, then drew aradius out from each. In an urban to suburban area, the majority of the tenantscame from within a one-mile radius, the remainder from within three miles.

Of course, the marketing radius continues to shrink as I survey this factoron an annual basis with my 46 facilities. As populations become more dense andself-storage facilities become more prolific, our ability to market to a widearea is limited. Recent surveys show about 50 percent of our tenants come fromwithin a one-mile radius, and 80 percent come from within a three-mile radius.Again, few renters come from beyond that three miles.

Oregon Survey

City Population

Number of Facilities

Square Feet of Self-Storage

Square Feet/
Person

Portland

510,000

39

2,350,000

4.6

Eugene

135,000

20

895,000

6.6

Salem/Keizer

157,000

24

1,018,000

6.5

Gresham

84,000

10

590,000

7.0

Beaverton

69,000

18

1,050,000

15.2

Hillsboro

66,000

5

315,000

4.8

Corvallis

50,000

7

271,000

5.4

Springfield

52,000

11

382,000

7.3

Albany

39,000

8

300,000

7.7

Tigard

38,000

6

345,000

9.1

Lake Oswego

35,000

5

300,000

8.6

Bend

50,200

20

880,000

17.5

McMinnville

25,000

4

155,000

6.2

Oregon City

23,000

6

229,000

10.0

Tualatin

22,000

3

170,000

7.7

Square Feet Per Person

In the 1990s, I discovered another theory/reality discrepancy. Back in thosedays, I used the phrase "square feet per person that the market cansupport" so many times I began to question its validity. In the early '90s,we talked about particular markets being able to support 2 to 4 square feet perperson. Later, we talked about 4 to 6 square feet per person that a market couldsupport.

That the square footage per person was necessarily increasing seemed like agood theory, and it seemed that number in each market should continue togrow--for a number of reasons. Self-storage had become an accepted use. We hadmore second-time users, and there was greater demand as we became ever moreadvanced in our ability to produce and procure possessions. But on what evidencewas I basing my facts? I decided to once again survey my Oregon facilities.

The chart generated from my survey detailed each city and its population,total number of facilities, total square feet of storage and proverbial squarefootage per person. The facts were interesting. Only three of the 15 Oregoncities I surveyed had a square-foot-per-person ratio of less than 6:1. Thiswould seem to indicate that markets could support a much higher ratio. Uponcloser inspection, however, one can see that 4 to 6 square feet per person isprobably all a market can support, since the balance of the cities surveyed wereexperiencing 80 percent or lower occupancy.

This community-information survey was conducted using my 24 years of records,printouts from tax rolls and title reports, and phone calls to owners. Ofcourse, the population will continually need to be updated, as will the numberof facilities and square footage as more self-storage facilities are built.Recently, I was provided a list of 42 new facilities in the planning stages inthe 15 communities I surveyed. The study did point out some accuracies in theextreme. For example, Bend and Beavertown, Ore., have the highest square feetper person, and tend to have the lowest occupancies and the most give-awaymarketing in the state. In this case, reality did support theory.

These days, many owners are concerned with overbuilding. I also wonder howmuch square feet the market can support. Is everyone in the American marketalready aware of self-storage? Are we only dealing now with the potential forrepeat business? Or is the market still expanding? Do young homeowners have anincreased demand for storage? Do the baby boomers, with their second homes andadditional toys, have an increased demand for storage?

Of course, these questions and concerns exist only in the realm of theory atthe moment. I will continue to survey my existing tenants to determine thedifference between facts and fictions. (And incidentally, if anyone would liketo know the punchline of that old joke, feel free to give me a call.)

Kevin Howard is the owner of Kevin Howard Real Estate in Portland, Ore.,which specializes in the brokerage, sales and management of self-storagefacilities. For more information, call 503.255.5621; e-mail [email protected].

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