Here’s an industry to tuck away on your list of conter-cyclicals. As people lose their homes, they need places to store their stuff. Which means good times for the self-storage companies. NYT:
U-Store-It’s stock is up 33 per cent this year. Extra Space is up 18 per cent. Public Storage is up 18 per cent.
“People might lose their home but they’re not going to lose their things,” said Charles Ray Wilson of Self Storage Data Services, a research firm.
The housing crisis has gotten bad enough, however, that storage foreclosures are now spiking, too, as storage companies are forced to auction off stuff left by folks who can no longer pay their bills. The NYT says information on the size of this trend is hard to come by, and it seems to differ by region.
Foreclosures are still soaring, so strong demand should continue. Once foreclosures begin to ease, however, we’ll likely see a lagging drop in the storage stocks, unless the industry is grossly short on capacity.
And then there’s the other aspect of this trend, which keeps all stock analysis in perspective:
“You tell yourself, ‘I’m only going to put my things in for a short time,’ ” [one storage auctioneer] said. “Before you know it, you’re behind. Then you have to pay penalties and interest. You owe $400 to $500. If you lost your job, you can’t come up with that, not if you want to feed your family.”
Nearly non-existent 35 years ago, self-storage has become ubiquitous, with 51,000 facilities nationwide. Even as the larger economy falters, the industry is flourishing. Executives say the mortgage crisis is one reason. Dean Jernigan, chief executive of the U-Store-It chain, says people generally rely on storage when they are dealing with major milestones: marriage or divorce, a relative’s death, a job transfer or, in boom times, remodeling or building new homes. Now he’s adding foreclosure to the list. “People are moving back down the property ladder,” Mr. Jernigan said.
Bill Martin, a 50-year-old former manager in the technology industry, lost his house in the Southern California community of Lake Forest last August. His local self-storage company sent a truck and driver to pick up his things, a service it offers all new customers.
“Storage has my hopes in it,” said Mr. Martin, who sleeps on a foldout bed in his mother’s guest room. “I don’t tell anyone this, but at least once a week I go over and look at my couch, my refrigerator, my TV stand, my mattress and realise I did have a life, and maybe there’s a way to go back to it.”