One of the life lessons that many people are taught as children are that you can’t always have it the way you want it (‘it’ being absolutely anything), and that sometimes you have to take what you have and just make the most of it. If recent history is any indication, that is a lesson that the self storage industry has learned pretty well.
In an economy that has been as poor as the United States has seen in a very long time, one would be hard pressed to find any industry that could be considered a safe or secure investment. Yet, somehow the self storage industry seems to be doing quite well. A representative from Wells Fargo had this to say about the industry in 2011:
"Self storage was the top-performing subsector of all REITs in 2011. The group generated a 35% total return last year, besting the overall REIT group’s 8.7% by 2,630 bps and the S&P 500's 2.1% by 3,290bps….”
With banks being reluctant to give loans for new construction, self storage companies have had to find another way to meet demand. Many have found success in renovating existing structures to turn them in to self storage facilities. Take East Sac Self Storage, a facility that recently opened in Sacramento, California. before the developers got a hold of it the building was a former data center for the state.
That is just one of many successful renovation stories. Last October, the site of a former topless coffee shop being turned into a self storage facility made news in Vassalboro, Maine. Not to be outdone is an effort in Salem, Oregon, that was reported about a month earlier. In that case, developers were taking a former amusement park, Thrill-Ville USA, and turning it into self storage.
Tenants of Storage Central in Buffalo, New York, may find the facility somewhat familiar. Before it was renovated and turned into the much-needed self storage facility, it was a warehouse for Hengerer’s Department store.
"After looking at this building from every angle, it became apparent that the best use, and frankly the most needed use, was what it was built for in the first place - warehouse and storage," says Roger Trettel, the building’s owner. "Our market study showed that the downtown professional and growing residential community does not have a readily accessible, clean, secure and professionally managed storage facility….”
Sources Used:
“Wells Fargo on Self Storage: Solid Fundamentals Reflected In Stocks - Maintain Market Weight; Upgrading CUBE As Lone Value Play.” StreetInsider.com; 23 January 2012.
“Topless coffee site to become self-storage business.” OnlineSentinel.com; 07 October 2011.
“Former Amusement Park in Salem, OR, to be Converted Into Self Storage Facility.” Inside Self Storage; 15 September 2011.
“Self-Storage Facility Opening on Ellicott Street.” BuffaloRising.com; 26 August 2011.