The self-storage industry is going through a period of major change and growth, and nowhere are those changes more evident than across Delaware. Drive along any major highway, and you are likely to see a ...
[caption id="attachment_219913" align="aligncenter" width="1200"] Amelia Wyant, left, and her sister Christine Moritz have expanded their local storage company, Sentinel Self Storage, across the state. | DBT PHOTO BY ERIC CROSSAN[/caption]
The self-storage industry is going through a period of major change and growth, and nowhere are those changes more evident than across Delaware. Drive along any major highway, and you are likely to see a new storage facility being erected or one being repurposed from an existing building.In fact, self-storage facilities have become more ubiquitous than the corner Starbucks – only about 25 in the state – and Wawas – around 50. Although exact numbers are difficult to come by, there are conservatively at least 250 self-storage facilities in Delaware.The industry is drastically evolving, erecting multi-story facilities with alluring amenities, attracting a more-upscale customer base and involving a more-varied ownership group while not abandoning its basic products and customers.“It’s traditionally been a mom-and-pop business – a big metal tin can on a concrete slab, often without electricity and certainly not plumbing,” said Jay White, founder of Apex Realty Advisory. “We are now getting into Self Storage 2.0, with facilities that have not only air conditioning but climate control and often with multiple stories and a freight elevator.”Which begs the question, “Why now?”“We believe demand is being driven by the housing market,” said Christine Moritz, who, with her sister, Amelia Wyant, owns Sentinel Self Storage, which has 11 facilities in Delaware, seven of them in New Castle County. “Over the past year, so many people have been buying, selling or thinking about it.” White added, “Historically, self storage has been driven by the movement of people,” many looking for temporary storage. “They’ve been around universities in Newark and Dover, the Air Force base in Dover and the downstate resort areas. Then, there are people who like to just keep stuff – there are a lot of hoarders out there!”Add to that the COVID-19 effect, as families consolidated in one place, at least temporarily, yet not ready to abandon furniture and other possessions. As offices closed and business went online, workers relocated to other areas. Many businesses themselves quit their offices and needed places to store records and sometimes furniture.According to Mordor Intelligence Research, the 2019 valuation of the self-storage market was $87.65 billion and is expected to jump to $115.62 billion by 2025. At present, there are an estimated 44,000 facilities – not individual units – in the United States.The best estimates of Delaware’s share of that pie come from Austin-based Sparefoot, which bills itself as the largest marketplace for storage. According to Sparefoot, there are:
42 self-storage facilities in the Newark area
40 in Wilmington,
39 in Bear
34 in Milford
34 in New Castle and
21 in Dover
White thinks those numbers are probably low.There are several reasons why these figures are approximate. As Moritz points out, there isn’t a Delaware chapter of the national Self Storage Association, and many local owners aren’t members of the national group anyway. And as Delaware Department of Finance’s Jamie Johnstone said, “Self-storage units may fall under one of several different types of licenses in Delaware,” so there is no central classification system run by the government.Sparefoot also indicates the growth has been lucrative – the average price customers paid for a storage unit in Delaware was almost $90 in 2010, dipped for a year each in 2011 and 2013 to under $85, then gradually climbed to more than $100 in 2016 and about $116 per rental in 2017. The average cost of rentals in Newark – the most expensive – was about $128, followed by Wilmington at $110, Dover at just over $100 and Milford at about $88. Storage unit price per square foot in Delaware jumped from about 90 cents in 2010 to just over $1.21 in 2017. As people are most likely to need storage space coming out of winter, rentals peak in May, hold steady over summer and decrease during the fall.It’s difficult to know which came first – demand or amenities that drive demand – but, as White points out, many people are looking for clean, secure, climate-controlled, long-term storage units to keep prized possessions, whether that’s an antique breakfront that doesn’t fit the current décor, a record collection, rare coins, wine, or even automobiles.
[caption id="attachment_219915" align="alignright" width="300"] This nondescript Glasgow warehouse is home to expensive art collections managed by storage and security firm UOVO. | DBT PHOTO BY JACOB OWENS[/caption]
Then, there is always art. While not technically self-storage, the most-impressive storage facility in the state opened last fall off Route 896 south of Newark – an $8 million, 50,000-square-foot facility with cold-storage options, concierge services, private meeting rooms and exhibition space and trained on-site “art handlers.” The New York-based owner, UOVO, has similar facilities in New York and Florida.UOVO serves “top collectors, creators, stewards, purveyors and archivists of the world’s leading collections,” a company spokesperson said in a prepared statement.“Delaware is a vital point of connectivity within the UOVO network, close in proximity to New York, Philadelphia and Washington, D.C.,” the statement continues. “Storing with UOVO in Delaware also allows our clients with concentrated inventory in New York to diversify locations.” Not surprisingly, the moms and pops chains are being joined, and in some cases replaced, by large investors, especially real estate investment trusts (REITs) which own about 16% of the business nationally. Of the five primary REITs, four have properties in Delaware. Three of them – CubeSmart, Extra Space and Public Storage – operate facilities under their own names, while National Storage Affiliates operate as iStorage and SecurCare among others. Their dividend yield ranges from 3.4% to 4.3% – average to better than average for REITs.
[caption id="attachment_219912" align="alignleft" width="300"] CubeSmart is one of the national brands that is expanding in Delaware, including this recently opened site off Chapman Road in Christiana. | DBT PHOTO BY JACOB OWENS[/caption]
Sentinel’s Moritz said, “These larger chains are always on the forefront of technology, and it forces us to modernize, as well – so we stay competitive.”John Tracey, partner in Young Conaway, specializes in working with builders on land-use issues and said he has assisted in getting approvals for about seven facilities in the past five years, including the retrofitting of the old Comcast Building on U.S. Route 13 in New Castle.“There is very little public opposition,” he said, and self-storage is popular with land-use authorities because, “they are less impactful – little traffic, no sewers, no school use, and they are often restoring older buildings in blighted areas.”The final question, however, is even more difficult than, “Why the boom?” – “When will it bust, or at least end?” Probably when financial experts who control the algorithms – real estate equivalents of Moneyball – decide to invest elsewhere. Charles Rodrigues, the owner of R&R Commercial Realty in Dover as well as the owner of two self-storage facilities – one each in Felton and Bridgeville – ponders where investment money is headed. “For instance, warehousing is still a very competitive use in this market,” he said. “And, with residential prices as high as they are, a lot of available land is getting snapped up for new construction too. With rising land and construction costs, new self-storage facilities will need to continue justifying the expense to build them.”