by Tony Gonzalez
May 16, 2011 6:11 PM
When the economy is going bad it can be hard for people to find good investments. The economy is considered bad for a reason; too many business ventures are failing, prices are going up, and people are out of work. However, in times like this there are some businesses that do flourish.
Self storage facilities have become more and more common over the last quarter century, especially the last decade when the housing crisis hit. Back in 1984 there were just over 6,600 self storage facilities in the country with right around 290 million square feet of rentable space. Fast forward 25 years and there are now over 46,000 self storage facilities across the country with over 2.2 billion square feet of space.
"The majority of self-storage renters are going through some transition in life," said Mitchell E. Danzis, president of Storage Station. "They’re building a new house, moving to a smaller home or apartment, starting a new business or expanding an existing one, getting married, dealing with the aftermath of a flood or storm or going out of the country during military service.
The amount of space makes sense when you consider the increase in demand over the years. In 1995, about one in every 17 households used a self storage unit. As of 2007 that number had increased to one in every 10, or approximately 10.8 million households (of the 113.3 million households in the country) for an increase of about 65 percent.
"Almost everyone has either used storage or knows someone who does," Joseph Pontes, general store manager of Hampshire Self Storage said. "This increase in knowledge has helped high-quality facilities remain at high occupancy, while aged facilities that may lack climate control or advanced security measures have [suffered]."
This kind of growth has led to some unprecedented growth for a handful of companies that are capitalizing on the market.
Extra Space Storage Inc. recently announced that they will be offering 5 million shares of common stock for sale in a public offering. The company is even willing to sell an additional 750,000 shares should Citigroup Global Markets Inc., the lone book-running manager for the offering, go over the 5 million share allotment.
The funds will be used to cover additional property acquisitions. Like many companies, they have been busy buying up as many self storage facilities across the country that they can get their hands on. Funds raised through the stock sale will help in covering a recent property purchase in Ohio valued at close to $40 million. The company currently has close to $200 million in acquisitions under contract.
Sources Used:
“More homeowners call self-storage facilities 'home.'” NorthJersey.com; 14 May 2011.
“Extra Space Storage Inc. Announces Offering of 5.0 Million Shares of Common Stock.” PR-USA.net; 16 May 2011.