Lava Lamps
It’s also about how firmly Americans are attached to their belongings, according to a 2009 study of storage by Carnegie Mellon University, Harvard University and the University of Virginia.
“We do not know if people store their lava lamps because parting with them is such sweet sorrow,” the researchers wrote in an article in the Journal of Experimental Social Psychology. “But we do know that they store them because they like them and that they like them because they’re theirs.”
The good news for the big public companies -- Extra Space, Public Storage, CubeSmart and Sovran Self Storage Inc. -- is that there’s a steady and growing stream of customers for their steel cubicles, even as storage developers run out of cheap land in urban and suburban areas.
“There has been very little building since 2007, and as demand increases, rents go up,” says Extra Space Chairman Woolley, 68.
Independent Owners
At the same time, 83 percent of the existing self-storage properties are owned by local entrepreneurs, according to the Self-Storage Association, many of whom will sell if the price is right. That means the big public companies may have years of expansion ahead.
Low overhead costs are what tempt the entrepreneurs who invest in storage.
“You don’t have to paint walls and replace carpets when tenants move out,” says Jason Smith, a broker in Salt Lake City for Calabasas, California–based real estate firm Marcus & Millichap Inc. “You just take a broom and sweep. The eviction laws are only 30 to 45 days, as opposed to six or nine months in an apartment, so you turn around and make money faster.”
After years of double-digit gains, Extra Space’s highflying stock is no bargain. Three analysts have downgraded their recommendations on Extra Space since April.