… Self-storage has tripled the S&P 500 since 2009.
{{ The storage customer is typically described as irrational, because they are willing over time to pay far more than the value of whatever they are storing. People are often in a pinch when they search for “storage near me.” Death, divorce and disaster create demand. So do marriages, babies and new jobs. }}
intercst
A close friend’s crazy sister had two chock full of absurd crap storage units, each the size of a two car garage, that were costing her the monthy equivalent of the rent she could not pay on her tiny apartment. Talking with her I suddenly realized that her obvious insanity in this situation was simply the end point of where millions of USA folk are heading to as well.
Might be as costly in total for USA as fentanyl addiction. Storing crap is absolutely lunatic, but so are more and more people. And when you get to the end of the hideous conversation you arrive at the fact that the people who store crap literally cannot face all the crap, and so they just keep paying so as to not have to face it.
Yikes.
David fb
david fb
I just to co-own a storage business. If I were to guess, 50% of the people storing shouldn’t bother, especially if they were long term. There were businesses that used us to store inventory as it was cheaper than doing in a high rent area of their business. Many short term renters that were doing renovation or moving and needed 3 months of storage. Then the rest of the long term storage shouldn’t have wasted their money. I think the worst was somebody that stored plastic bags collected from shops. She use to come in and add more and reorganise them. I questioned her sister that was settling the bill and she just said it was easier to pay us to store them in a locker than to get her to throw them out….
Many of my boomer friends spend hundreds of dollars a month on lockers full of things they value that their heirs will take to Goodwills or the local landfill. I see it as the foreseeable result of a society built on consumption and accumulation- along with obesity and diabetes.
HA! Interesting analogy. I was at a nutrition lecture years aho and the speaker was using pretty much the same one to illustrate the development of new fat cells.
She used a garage, though…slightly before the fashion for more and more storage units. Continued overeating triggers growth of adipocytes as more triglycerides are stored…so, just like building a new garage because 2 isn’t enough to store your excess stuff, you lay down new cells. And more and more as you fill up each one. I always recall that story as I drive around these parts and see another structure going up. Either a storage unit for stuff or old folk.
There was a poster on Fool 2.0 named Golfwaymore who (as I recall) retired and built a storage facility and gave us all the jots and tittles of the construction and then the growing occupancy and finally … he disappeared.
There was lots of talk about how this was a low-barrier business to competition and so on, on the other hand it was a gold mine because the checks just rolled in every month. I was semi-interested just because it’s an interesting business model, and also I was renting space - at the time for our RV which was too big and fugly to store in our driveway, so for the low low price of $50/mo I could have it somewhere else.
I had also used one of these places when we visited our condo in Boston during the summer, lastly to store tools and basic buidling materials as would not fit comfortably in the condo itself. It was pretty much the size of a mini-refrigerator, just big enough for a couple tool boxes and some wallboard and wood, and again, it was quite a convenience.
Anyway, interesting business. Passive income, with only the occasional deadbeat and clean out, and as the great philosopher George Carlin noted, “a place to keep your stuff”. Albeit remote. We all have too much of it, and you are probably as guilty as I.
Today’s Journal has a story on the front-page:
Wagner quit his physical-therapist job the day before he bought his first self-storage facility in 2011. It cost $330,000 and was losing $2,000 a month, but he got it cranking out cash, added units and sold for $1.8 million, the first of several lucra-tive turnarounds.
While my parents don’t spend 100’s of dollars a month on lockers as they have enough space, they have forever kept many things they valued that their heirs haven’t really cared for either. Some of it is worthless and may go to the landfill, others date back to the 1700 and 1800’s (tea sets from England) that may or may not have value…It’s not always based on consumption and accumulation. Just somethings are import at that time and they may perhaps discard more of it and keep some that they are really valued.
Well that’s the funny thing, you can’t tell what will become valuable or “treasured” 20, 50, 100 years from now (although I dare say almost anything 200-300 years old is worth something.)
When I went to college my mother threw out carton after carton of my vast collection of baseball cards, mostly won in card-flipping games against others at school. Little did she know that the collection would, a decade or two later, probably be worth what was spent on my college.
On the other hand, toward the end of their lives my parents started mailing all four of us kids “stuff”. High school yearbooks, pictures of little league teams, baby pictures, newspaper clippings from the weekly rag of our piano recitals, things like that - and that was wonderful to receive.
I have no idea where they stored it all, because sometimes it was physical objects, like a sterling silver tea set my grandmother had owned, or a quilt my sister had sewn. But I am sure it wasn’t in a self-store place because so far as I remember, those didn’t exist back then.
That’s right - while they have proliferated in recent years, storage units have only been around for a half century or so. So, no they did not exist in the 18th c. [from a fellow codger].
Pete
I remember my dad telling me a story. Back in the 70’s him and his brother-in-law were approached with a business proposition, to buy into a self storage facility. They couldn’t understand why people would pay to rent space for stuff. It was a pretty new idea. Little did they know the industry it would become.
I have two friends (one early retired from tech on this income) who co-own several low-end facilities. They got fed up with renting houses and the issues with that. New carpet, new HVAC, etc. etc. etc. They saw self storage as a recession-proof low-maintenance way to play in real estate. But I do remember both of them saying the market was getting saturated 5 years ago.
Sorry about your baseball cards. While I was away at college my parents threw away a large box of superman and batman comics that I bought with my 25 cents allowance in my pre-teen years, two comics each week. That’s life.
This storage mania may be changing in the new middle agers. My kids belong to a “buy nothing” group in which people give away stuff they don’t use to other people in the group. With three young boys in the house, chairs and sofas tend to have a short lifetime, but they haven’t bought one in years. Now if my husband and I could just stop filling up space with useless stuff, I guess we’d have that problem solved.
Family friends their son became a lawyer. He works in Manhattan. During the pandemic one of his daughters turned 16. He bought her a Mercedes. Nice big bow on it.
The storage of that car? I do not know but I can not afford it. I know that much.
We needed better math teachers back in the 1960s and 70s. God knows we are free to dis our kids’ math skills now. Ironic.
Mom 30 years ago used to refuse gifts. They lived in 1600 sq ft, “if I take that gift I have to throw something else out”. Some Americans do not have that concept down.
There really is no reason for the storage industry.
But here we are…
Great investment the rubes WANT TO USE. So, the reason is there.
Totally true…the stars aligned.
That can depend where you are. In HK, apartments are tiny and some storage companies would locate near residential areas where they could become an extension of your place for items you may occasionally use. You could reduce but if you are a family living in a shoe box, it can help.
When I had my business, a lot of the customer used the space for inventory of their eComm business and occasionally had customers in to view items, they rather not bring into their home.
Then we just had businesses that stored to reduce their own rental costs and lots of customers that needed 2 or 3 months due to being in between moves and having their condos renovated.
Whike most people doing long term storage are wasting their money, it does serve a purpose.