According to self-storage operator Equity Based Services, the recession is good for business.
Equity Based Services, Inc. (EBS) (www.ebscorp.com) is based in San Diego, California, and specializes in self storage property. It is one of the largest privately held owner/operators in the country (although significantly smaller than larger, publicly-held companies like Extra Space Storage (NYSE: EXR) and Sovern Self Storage (EXR: SSS) in terms of total properties under management.) With a current portfolio of 63 properties (worth $300 million) under management (in 11 states) and 15-20 new acquisitions per year, EBS recently reported that it obtained an extension on a $3.5 million construction loan for a new, climate-controlled storage building in Peoria, Arizona, and is enjoying higher sales this year as more businesses and individuals are forced to temporarily store equipment and belongings. (According to their website, EBS typically acquires existing self storage facilities both stabilized and cash flowing as well as opportunistic "Value Add" transactions.)
As reported in the October 5 San Diego Business Journal article, “This economy has been a boon for the self-storage industry,” said Troy Downing, a principal at EBS. “We’re a cash flow business. As businesses downsize into smaller facilities, all those desks, file cabinets and the rest of it have to go somewhere.” And he is right. Many companies often own - rather than rent - their office furniture. With an uncertain economy, it may prove unwise to unload the credenzas, desks and swivel chairs, so self storage makes the most sense.
“The financial landscape still makes sense for deals that make sense,” said Downing. EBS’ August sales were up 13 percent from the prior August, however, specific markets are doing extraordinarily well, including Texas, (where EBS has 20 storage facilities), and Las Vegas/Henderson, Nevada (where EBS has 9 storage facilities.)
Virginia-based Self Storage Association (SSA) (www.selfstorage.org), the only national U.S. not-for-profit (501-c-6) trade organization (with 6000+ members) recently reported that the self storage industry had revenues of $20 billion in 2008 and employed 160,000 workers.