McDonald’s boasted 14,350 restaurants in the United States in 2014. That’s a big number. But it pales in comparison to the number of self-storage facilities dotting the country: more than 48,500 at last count.
There are more self-storage facilities in the United States than there are McDonald’s, Subway and Jack in the Box restaurants combined.
The self-storage industry is a lucrative one, too. The Self Storage Association reports that these facilities generated more than $24 billion in revenue in the United States in 2014. It ranks as the fastest-growing segment of the commercial real estate industry during the last 40 years. The industry pays more than $3.25 billion each year in local and state property taxes, according to the association.
None of these numbers surprise Maurice Pogoda, principal and president of Farmington Hills, Mich.-based Pogoda Companies. He specializes in the brokerage and management of self-storage facilities.
And lately, business in this sector has been good.
“There is about 7 square feet of self-storage space nationally for each person in the United States,” Pogoda said. “That’s an awful lot of self-storage space. This sector isn’t under the radar any longer. It is very much a big business.”
Pogoda Companies proved this earlier this spring when it sold National Storage Center, a 749,436-square-foot portfolio of 12 self-storage facilities across the state of Michigan, to buyer Simply Self Storage.
The portfolio features 5,505 storage units and 498 RV/boat-parking units. It sold for $61.3 million, which set a Michigan self-storage portfolio record. The sales price came out to $81.79 a square foot.
“When I started in this industry, self-storage was something no one knew about,” Pogoda said. “That has changed. Even though people don’t think of it as one of the major food chains in commercial real estate, it really is.”
There are plenty of benefits to specializing in self-storage. There is the demand, of course. Pogoda says that about one in every 10 people in the United States has a storage unit somewhere. He says, too, that about 50 percent of U.S. citizens have used self-storage facilities at least once in their lives.
Consumers rarely default on their self-storage units, either, Pogoda says. And the industry doesn’t see wild swings in occupancy. Even during the Great Recession, the occupancy rates for self-storage units were typically in the range of 75 percent, Pogoda said. And during good economic times? The occupancy rates are often 90 percent or higher.
The self-storage industry is show no signs of shrinking, either. Marcus & Millichap reported several big self-storage sales in the Midwest region during the first months of 2015. Hoerth Storage in Fond Du Lac, Wisconsin, sold for $4 million, while Grand Central Self Storage in Ferndale, Michigan, notched a sales price of $3.265 million.
Centerville Self Storage in Woodstock, Illinois, sold for $3.175 million, and Breiel Boulevard Store-N-Lock in Middletown, Ohio, sold for $2.6 million.