Hi, everyone. Jim here. The self storage show.
Thanks for tuning in again for another episode. Uh, this one here I was thinking I was going through some training sessions and I was like, that's a big topic to talk about, you know, when new employees were coming into the fold. Kind of like that training program.
Now, i'm not gonna get into all the specifics on that on this episode, because hey, snooze fest? No, I wanted to. I just started incorporating this and I get new employees coming on and just getting that first day before we get into the software. Before we get into the policy procedures, all that kind of stuff, I kind of wanted them to get more of ah, just over all of you of the storage industry because, you know, you always like hiring somebody like well, why are you coming to storage?
I don't know. You know what you know about it? I don't know. You know, most people don't.
You know, I didn't really I didn't do any of much research. My first got into it and had just just kinda went with the flow.
But there's a lot of a lot of videos out there right now. And of course, i'm such a visual learning learner. E duh. I'm doing this every day online and doing the videos, so yeah, that's why I learned why I absorb just kinda. It's much more, uh, user friendly. I guess you could say rather just having someone talk about it.
You know what, what's going on and how the industry started. So I found this video just come in not too long ago, not quite sure why they did it.
Cheddar is the company e don't know that that does it on youtube, and it's kind of like an explainer video. So I thought I'm sure that you guys can incorporate that in your own trainings or anything like that. We're talking toe new employees just kind of gives a good overall history quick synopsis of storage and why it's a great asset and your investors air coming into it and how it's kind of a good, stable earner, you know, for investors. So it's it's a cool video. So anyway, that's enough of me talking. I'm just gonna play that and you can enjoy so let's go find it. There has made a big screen you want to see me, all right?
And I recently did a google map search of self storage facilities near my apartment in brooklyn, and I found that there are over six locations just in a 20 block radius of my apartment.
But it's not just brooklyn. Today, there are more self storage facilities than ever before. In fact, there are more self storage facilities in the united states than there are mcdonald's. And as it turns out, self storage is a $38 billion industry.
So why are americans seemingly obsessed with self storage? In 1964 rust williams and steps on bob month opened a one. You store it, you lock it. You carry the key in odessa, texas. I know it's a mouthful, but does a good job of defining self storage. They provide the space and you do the rest.
This was one of the first business is to follow this model, but it was market. It's oil companies for storing supplies, not the average citizen.
The potential of self storage for everyday individuals was revealed with the arrival of giants public storage and sugar national storage centers in 1972. This was the beginning of the present day craze. Today, there are 50,000 facilities across the country, accounting for about 2. 3 billion square feet of space stretched out.
That's enough to cover 1364 football fields back to back. But how do we get to a point where the sheer amount of storage could fill the hoover dam 26 times?
Well, it all happened pretty recently. The self storage industry has seen nearly an 8% annual growth rate since 2000 and 12. The industry success could be attributed to a perfect storm of sorts.
Let's start with the business model. Self storage is a relatively easy industry to invest in. It's not an industry that's dominated by huge brands. Like, say, the tech industry. Industry ownership in self storage is fragmented onley.
18% of facilities are owned and operated by the sixth largest public companies. 9% are owned by the next 100. Operators in 73% of the industry is owned by small operators.
That's your mom and pop shops. There's more opportunity for the average person to begin investing in their own self storage operation. Not to mention the initial cost for starting a self storage company is relatively low compared to other ventures like the hospitality industry.
First off the success of each self storage facility relies less on location businesses. Perspective facility owners are happy to build in areas that are considered less desirable and therefore cheaper.
They do not need to be placed directly on a main strip. Nor does the business require a quiet or aesthetically pleasing environment. The units themselves are cheap to build.
There's not much plumbing, insulation or windows, just plain metal buildings or rows of metal containers and a central hub for a manager in an office. In a similar vein, the facilities don't require much maintenance.
Customers come in running space for about 50 to $100 and they fill it up. But there's stuff, you know. The expenses were fairly stable and fairly low. About 35% of your, uh collected income.
And if rent isn't paid incomes, an american pastime and personal favorite television indulgence storage wars, no rent in the unit gets auctioned off another money making venture for the company. But i'm not done pissing everybody off. I might just have to buy them all today. Self storage units are low cost to build, require little maintenance and yield high profits. But for this business model to be so successful, there needs to be a demand, and the demand we see today is a result of major shifts in how we live.
Let's take a look at the housing market. Americans have been continually relocating from the midwest and the northeast, often heading to sunbelt cities. In fact, nine of the 10 counties seeing the largest number of population growth are all in sunbelt states.
Most of these re-locators are empty nesters looking to downsize in a warmer climate climate. But when they move, they need a place to store off their memories. The idea. If you're moving so you rent something, you put it in the storage and you used to temporarily.
But the average storage time is increasing. Now from, you know, used to be 15, 18 months now. It's like 18 to 24 months. I've seen some that have average length of stay is like five years.
The contracts are all month, month it's not leases, but it's not just boomers were buying on self storage. Millennials are much more likely to live in urban areas than previous generations.
A 2000 and 19 study from the journal of regional science found that young people aged 25 to 34 preferred living in urban areas than generations prior, and this downsized on space cars on a specific needs for the self storage industry. But there's something else that makes self storage so resilient, and that's their ability to thrive in a down economy.
Self storage real estate investment trust, also known as reits, were the only form of real estate asset that produced a positive return during the great recession.
They were also one of the least foreclosed upon real estate sectors during that time. The data shows that it's been very recession resistant, and I think in past years, if you look a you know, a 25 year timeline and you see how you know it's not have it doesn't have the huge peaks and valleys that other sectors tend to have, and that's what made it really attractive. I mean, it's not very exciting itself. However, these reits ended up buying out many of the mom and pop own self storage companies.
So while the industry is still mainly owned and operated by self made companies, the recession given opportunity for those larger companies thio eat up their competition. Some trends are suggesting that an overbuilt industry mainly toe oversaturation in some markets.
For example, in sarasota county in florida, vacancy rates increased from 2015 to 2017, with the market stabilizing in 2019. But today, a down economy is the result of the coronavirus pandemic, and it presents more opportunities for the self storage industry. The same effects that have come during a recession have come during the pandemic that includes downsizing, divorce, death, you name it.
For example, in march, college students found themselves sent home from schools and universities. This gave self storage companies and influx of business as college students began to be places to stash their stuff with short notice.
With over 60 million people unemployed as of july, delinquency rates rose. In the self storage industry we're seeing, you know, essentially historically low interest rates in the cash flow has not changed dynamically due to the pandemic. So I think the outlook is, you know, steady as she goes for for self storage in the years ahead. And I think some folks look at it as kind of a safe haven because of its steadiness.
So we're seeing increased capital flows to the sector so I think we're looking at it as relatively a relatively positive outlook. But we also acknowledge there's still a lot of my nose, the length of the pandemic and so forth.
So it seems that even in the midst of a global pandemic, we can count on one constant. Still, storage places will continue to exist pretty much everywhere.
And as people move and household consolidate, just like death and taxes, people will always see the place to store their stuff. How many self storage facilities are around you?
And do you self storage sound off in the comments below? And as all right, there you go again. It's kind of a seven minute video. It gives a good synopsis of history of storage and wire. Investors are jumping into it because it's it's a good investment.
Eso again. I've been kind of using that for new employees coming on just kind of give them a good overview. Do that. I mean, just try that out.
Look online. Look on youtube. I know people. Not to my own home. I know people have kind of use some of my videos and use that kind of on the first day of trainings or when they're talking about their sales calls. And there are certain different things they've been using. Kind of my stuff, uh, help communicate that and get the ball rolling when it comes to different ways of training their employees.
So, yeah, it's kind of fun. So again, take the time. Go on youtube, you know, looks for some self storage video and see what you can incorporate in your training. This is just another element of giving the point across.
You know, i'm kind of getting one of the same page and have a better understanding. So that's what we're here for. So again, thanks so much for being a part of this guy's listening tuning in all the time.
I really appreciate it again. Go to put the banner up again real quick. If you want to be part of the upcoming challenge. Three mile challenge dot com. It's coming up here in very shortly, so go over there to registered. Get more information.
I hope to see you there. Well, it's gonna kind of fun. We'll be getting a small group together and kind of we'll be building something special each and every day, going through this. So it's gonna be fun again.
Thanks so much, guys. Have a good rest your day. Take. Yeah.
Jim Ross showcases a great introductory video about the self storage industry he found on You Tube.
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