The Booming Real Estate Sector: Public Storage Facilities.

It really isn’t news that the overall housing market is facing tough times.  What may be news to you is that there is a booming segment in the real estate industry.  Public storage.  With the current housing problems many people are looking for temporary storage of household items during moving, selling, or unfortunately foreclosures.  The public storage sector has seen a positive jump from the downsizing that American is going through.

Public storage is also benefitting from baby boomers downsizing from large homes to smaller homes.  Many boomers after years of accumulating household items feel a need to clean their homes and offload some of their items.  Instead of trashing the entire collection of years of stored goods, they would rather rent a public storage facility and keep their items locked away.  Amazingly this feeds into the packrat mentality so it seems like there is a niche.

We need only look at the stocks of a few of these companies:

 

 

It may be odd to see sectors in real estate that are actually up on a year to date basis but these are some of the unintended consequences of a declining housing boom.  Many times, these self storage facilities provide a convenient place to unload items for a reasonable price while people figure out their next move in life.

Many times, people simply do not return for the items:

“(Naples News) With flashlights powerful enough to be the envy of spelunkers in hand, two dozen people file past a 25-square-foot self-storage unit in Estero to inspect its contents.

A black trombone case and beige comforter are balanced atop a plastic crate of records.

Boxes are stacked at least three-quarters of the way to the 8.5-foot ceiling.

“No touching, folks,” warns auctioneer Jerry Mahaffey, admonishing one person who pokes at a cardboard moving box at the front of the unit.

No touching. No entering the space. No opening boxes.

The unit goes for $250.

Bidding on abandoned storage units at auction is a gamble, but the possibility of hitting the auction jackpot is why some Southwest Florida residents are making the hobby a profession.”

The above story is from Florida which is facing the brunt of the housing correction.  People many times will leave items in these self storage facilities and fail to come back for a variety of reasons.  It could be that they simply do not need the items or cannot afford the rent on the unit.  Auctions are becoming a bigger occurrence as the economic times become harder for people to make even the most basic of payments.

The public storage industry got a bump in media a few months ago when it turned out that a unit that contained Paris Hilton’s items was auctioned off:

“(NY Times) Several months ago, the storage auction industry got an unexpected blitz of attention when Paris Hilton’s overdue balance of $208 led to the sale of the things she had kept in a Los Angeles storage unit: sex tapes, photographs, diaries and prescriptions for the antiviral drug Valtrex, among others, items that can now be viewed online for a monthly fee.

The incident offered a glimpse into an industry that operates on the fringes of New York but is very much a part of it, and cast a spotlight on exactly what happens to possessions when people can no longer pay their storage bills.”

Well there you have it.  The unintended consequences of a declining economy.  There may soon be a saturation in self storage since many people are now jumping into the industry and profit margins as with any industry with many competitors, will start diluting.  Who knows, maybe your next storage auction will uncover the goods of a Hollywood celebrity and yield some big gains.

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