Industry Trends

Self Storage Industry

The self storage industry is one of the few remaining industries where local, small operators are king. According to industry reports, the top ten operators control less than 20% of the self storage market. Although some markets are saturated, overall the industry continues to grow. National occupancy rates ranged from 85% to 91% in the last few years. As of 1997, 6,994 self storage facilities existed in the United States, with the majority of those establishments located in the top eight states of California (1,217), Texas (704), Florida (567), Washington (287), Georgia (240), Virginia (204), Illinois (201), and Ohio (195).

See:
1997 US Economic Census, US Census Bureau. How to Start a Self Storage Center. Entrepreneur Magazine Group 1993. Available to SBDC Business Advisors through SBDCNET.
"New Players Swarm into Personal Storage Market" Los Angeles Business Journal, 7/19/99.
"Self-storage Comes Out of the Cellar" Washington Business Journal, 2/17/97.
"Self-Storage Industry Seen Coming Out of the Closet" Going Public: The IPO Reporter 21 (45):8, 11/10/97. "Self-storage Saturation" Louisville Business Journal, 5/28/99.

Revenues and Profits:

According to the 1997 Economic Census, the average revenue for self storage facilities nationwide was $361,000 in 1997. In Entrepreneur Magazine's How to Start a Self Storage Center the average net profit before taxes is estimated to be $89,000, with a minimum start up investment of $72,000 and an average start up investment of $350,000. The cost of operating a facility can be quite low because of low operating costs. On average, there were three employees per self-storage facility in 1997 with an annual average payroll of $42,000.

See:
1997 US Economic Census http://www.census.gov/epcd/www/econ97.html How to Start a Self Storage Center. Entrepreneur Magazine Group 1993.
Available to SBDC Business Advisors through SBDCNET. "U-Stor, They Profit" Business Journal of South Florida, 4/24/97. http://www.bizjournals.com/southflorida/stories/1997/02/24/story3.html Facility Requirements: According to How to Start a Self Storage Center, profitable facilities have leasable space of at least 25,000 square feet. Average size of these storage centers range from 30,000 to 40,000 leasable square feet. They also recommend a good mix of storage unit sizes, based on your customer base. As a general rule of thumb, the lower the economic level of the trade area, the smaller the average size of the rental units. In a location where the potential for commercial use exists, more 10 by 20 and 20 by 20 foot units should be built. Average rental price for a 100 square foot unit was $85 in 1997, according to a report by BT Alex Brown (as reported in Going Public: The IPO Reporter).

See:
How to Start a Self Storage Center Entrepreneur Magazine Group 1993. Available to SBDC Business Advisors through SBDCNET. "Self-Storage Industry Seen Coming Out of the Closet" Going Public: The IPO Reporter 21 (45):8, 11/10/97.

Key Demographics:

People in transition use public storage facilities. Key demographic groups for self service storage facilities include young adults and seniors. Young adults use the facilities because they are usually more mobile and have not settled into a home. Seniors rent the units to consolidate their belongings when moving from larger houses to smaller dwellings. Apartment renters, mobile home owners and military personnel also rent mini-warehouses. In addition to consumers, businesses find self storage units more cost efficient to store inventory or records than space at their commercial location. Businesses rent approximately 35% of all self storage units. Homeowners are the least likely to use self storage facilities as they generally have enough storage space in their homes. The exceptions are people who need additional space for a hobby, those storing things temporarily in order to remodel the home, or those who need space for recreational vehicles.

See:
How to Start a Self Storage Center Entrepreneur Magazine Group 1993.
Available to SBDC Business Advisors through SBDCNET.
"Getting by on Fewer Movers," American Demographics 12/95 http://www.demographics.com/publications/ad/95_ad/9512_ad/ad839.htm "Off-site Storage Gains Business Popularity," Memphis Business Journal 11/3/2000 http://www.bizjournals.com/memphis/stories/2000/11/06/focus2.html

Links of Interest

Self Storage Association of America Association publishes and sells industry research information including the Self Storage Almanac ($).

Archived articles of the association magazine, the Ministorage Messenger($) are found at: http://www.ministoragemessenger.com.

Self Storage Now Self storage facility owners may subscribe for free.

Franchise Opportunities
Although many companies offer dealership opportunities, Storage-USA, Inc. is the only franchise opportunity found by SBDCNET. For further information see their website at: http://www.sus.com.

Small Business Sourcebook (2000) "Public Warehouse/Ministorage Operation" A listing of articles, contacts, associations and franchise opportunities for self-storage and warehousing businesses. Available to Business advisors through SBDCNET.

*See http://www.census.gov/epcd/www/naics.html to search for other industry classifications or cross reference SICs.
($) Indicates information available for a fee.
Articles cited that have no internet links are those found by SBDCNET staff through our many internal databases. SBDCNET provides articles within information research packets based on SBDC client questions. SBDC business Advisors may submit information requests for qualified clients at:http://sbdcnet.org/formonline.htm.

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