Moving millennials and downsizing boomers have led to an explosion of self storage facilities. Almost 1 million square feet of self storage space was built in central Ohio in 2018, the largest increase on record. Builders are looking to empty stores and even a former hotel for space that can be used to store all our stuff.
With baby boomers downsizing and millennials settling into micro-units, what happens to all their stuff?
The answer can be found in hundreds of small, windowless rooms that have been built in central Ohio the past few years.
In central Ohio and beyond, shifting demographics have led to a boom in the self storage industry. Almost 1 million square feet of self storage space was built in the Columbus area in 2018, more than in any previous year, according to the commercial real-estate firm Marcus & Millichap.
While park-and-unload storage centers remain the industry’s bread and butter, demand for storage space has gotten so great that operators are turning to unconventional spaces.
Work is underway converting the former Giant Eagle on East Dublin-Granville Road into a storage center. On the West side, a former Kmart on West Broad Street has been turned into storage. On the East Side, a former Sun Appliance store on Alum Creek Drive is now a U-Haul storage center.
In addition, a growing number of self-storage centers are going vertical. One of the most visible examples is on Sinclair Road on the North Side, where U-Haul is converting the former Ramada Inn into a six-story storage center.
“With our acquisition of the former Ramada Inn, we are experimenting with converting some old hotels,” said Dean Haske, president of U-Haul Co. of Ohio.
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The first phase of the center is expected to open in the spring. When finished, it will offer 1,300 storage spaces, Haske said.
In a similar vein, Tri-Village Self Storage built a six-level, 684-unit storage center on East Long Street Downtown a few years ago.
“We have people storing heirlooms, art, using them for seasonal closets — any stuff you can imagine,” said Tim Galvin, chief executive officer of Brexton, a Columbus company that builds and operates storage centers under the Tri-Village label.
The Tri-Village site offers 186 lockers kept at 55 degrees and 70% humidity for wine storage. Renting a unit provides access to a wine-tasting room that can accommodate more than two dozen guests.
The Tri-Village and Ramada Inn U-Haul offer a hint of where at least some of the industry is headed. In addition to their high-rise design, they offer state-of-the-art security, climate control, elevators and restrooms. (Galvin said Tri-Village’s space is so nice that one customer tried living in his unit until he was discovered.)
“The industry is about 50 years old. As far as industries go, it’s relatively young, but it has seen a dramatic maturity in the sophistication and quality of properties over the last 10 to 15 years,” said Tim Dietz, chief executive officer of the industry’s trade group, the Self Storage Association.
The industry might be maturing, but it remains well positioned.
“The beauty of self storage is it’s recession-resistant, it’s millennials staying in apartments and empty nesters moving into condos, it’s small businesses using the extra space for storage,” said Brett Hatcher, with the Columbus office of Marcus & Millichap, who leads one the largest commercial real estate teams in the nation focused on the industry.
“Discretionary spending is at an all-time high right now, allowing people to buy more and more stuff,” he added. “That’s driving this as well.”
Nationally, 50,000 self storage facilities can now be found coast to coast, according to the Self Storage Association. In Ohio, there are 1,724 facilities, more than any state except California, Texas, Florida and North Carolina.
Central Ohio is home to 311 storage facilities, according to Brexton, relying on data from the real estate service Radius.
According to the Self Storage Association, 10.6% of American households rent storage units, a figure that has remained relatively constant since the economic recovery, Dietz said.
About 55% of self storage customers are in transition while the rest is filled with businesses and individuals who keep units for long stretches.
> “Baby boomers are still the lion’s share of self storage nationally,” Dietz said.
The industry also has benefited from the rise of eBay, Etsy and other online sales channels, as home-grown merchants need space to store their wares.
Nationwide, self storage units consume 1.7 billion square feet. In central Ohio, self storage units comprise 11.8 million square feet, or 5.5 square feet per capita, less than the national average of 6.5 square feet, according to Marcus & Millichap.
Despite the arrival of high-rise and niche storage facilities, most of the units remain the traditional single-story outdoor drive-up design, full of 10-by-10- and 10-by-20-foot spaces (the two most popular sizes, according to the research firm IBISWorld).
Such facilities have been around for decades, but for years were considered temporary uses until more lucrative buildings such as offices, shopping centers or apartments could be built.
“It was always just a placeholder for other real estate, when it could be knocked down,” said Hatcher. “It was the red-headed stepchild.”
That has changed dramatically, as investors and developers realized self-storage facilities provided dependable income combined with low building, operating and staffing costs.
“Now, it’s seen as a cash cow, a diamond in the rough,” Hatcher said.
Last year, the industry posted revenue of $39.5 billion, according to IBISWorld. More remarkably, IBISWorld estimates that $16.2 billion of that was profit, a 59% return that would be the envy of most industries.
Seventeen central Ohio storage facilities are in the pipeline, but experts such as Hatcher and Galvin say the industry’s building explosion might have passed as the industry settles into maturity and focuses on service.
“Customers are seeking more enhanced services to accompany the storage product,” said Haske, with U-Haul. “Today’s self storage customer isn’t just looking for more — they expect more.”
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