Room for more competition: At five stories (center), CubeSmart added 1,311 self-storage units to the market when it recently opened next to U-Haul Moving & Self-Storage of Westchase. Both facilities are off of W. Sam Houston Pkwy S frontage road.
Two years ago, the Houston area experienced a self-storage boom where new construction saw 6.7 million square feet added to the market. The city’s strong job and population growth contributed to this healthy industry climate.
However, before the pandemic struck, construction began slowing. Developers added 1.3 million square feet of storage in 2019 compared to 3.8 million in 2018.
“The three main reasons people use self-storage are death, divorce and displacement, all related to life events,” said Steve Mellon, managing director of the national self-storage team for JLL Capital Markets. COVID-19 created another category: Disruption by being put on hold. For instance, Mellon said, a restaurant might store their equipment hoping to come back once normal business resumes.
While this unintended consequence has created a small uptick when it comes to demand, density is the main driver said Mellon. “One out of 10 households use storage; the more people, the more need for storage,” he added.
Most investors and developers look at a three-mile radius for their demographic analysis. Most self-storage customers come from communities and neighborhoods close by. Ricky Jenkins, principal of The Jenkins Organization, says Westchase’s mix of multi-family residential and business are a good source of customers.
“Apartment dwellers, homeowners and businesses are all frequent users of self-storage,” said Jenkins. “Businesses typically comprise 20 percent or less of a storage property’s rented space. Thus, residential customers represent a much larger segment of the market while multi-family residents typically rent smaller unit sizes.”
Storage options in the District
Public Storage, which has 1,000 units, leases 5’x5’ space ideal for items that clutter garages. Located at 2850 Rogerdale Road, its larger 10’x10’ and 10’x20’ spaces serve renters who have limited storage space because their apartment or condo doesn’t have the room. Rental rates here are comparatively less than other facilities because none of its units are climate controlled. Another Public Storage, located at 2900 Woodland Park Drive (at Meadowglen Lane), does have climate-controlled units.
Self-storage expert Steve Mellon, of JLL Capital Markets, tracks industry trends.
JLL’s Mellon says space needs in Texas average around 10 square feet of storage supply per person. “New supply should not be added until the current supply drops to 7 square feet per person.” Mellon said the District’s self-storage inventory is on par with the rest of the city.
For the past year, any commuter on the W. Sam Houston Tollway could watch the construction of Westchase District’s newest self-storage facility. CubeSmart opened in June with 1,311 climate-controlled units on five floors. Many observers were surprised when CubeSmart broke ground immediately adjacent to the U-Haul self storage. Perhaps that speaks to the demand for local self-storage as much as anything.
Not your average self-storage
Offering 698 units, U-Haul has features not typically found in self-storage facilities. Business offices can be leased on the second floor of its Building A. These units come with a window and parking. Storage units are available directly across from each office.
Who needs a wine cellar? Wine connoisseurs will appreciate another specialty with U-Haul’s block of wine storage units which is kept at 57-degrees.
Out of the cellar: Behind these doors at U-Haul is a 57-degree cooled block for wine storage.
Security Self-Storage, located at 9526 Westheimer Road, features units ranging from 5’x5’ up to 10’x30’. They have both climate controlled and non-climate controlled units.
Mellon cautioned that Houston has been dealing with an oversupply of new storage space. He said additional development will be challenging for the Houston market for the next few years.
“Pre-Covid, Houston has been dealing with an oversupply of new storage space, thus there is heavy competition for new renters which lead to lower rents,” said Mellon.
