Texas is bigger and bolder than the rest of the country and has a generous self storage sector to match — its large cities offer more square feet of storage space than almost anywhere else. And in addition to helping Texans enjoy their lifestyles to the max, the industry steps up to the plate in challenging times. This enhances its reputation for being both a valuable service and a worthwhile investment opportunity.
Texans are offered more square feet of self storage space to rent than residents of any other highly populated US state. The Lone Star State also has the 2nd highest total square footage of storage space, just behind California, though it offers more per capita of the population than The Golden State and the prices are a lot cheaper. In addition, Texas’s big cities figure very strongly regarding the amount of storage that is available per person, currently taking four out of five positions in the list of the top 5 cities in this regard.
Texas offers a great deal in terms of housing, employment and leisure opportunities, and it has a self storage industry that helps out in all these aspects of life. The generous attitude also extends to prices, which are low compared to other large US cities, sometimes costing only half as much. Texas’s economy knows ups and downs but has been boosted recently by the relocation of some high-profile companies, helping reduce unemployment rates. The local self storage sector profits from this and also from the state’s continuing desirability as a destination, providing a service to people moving there and acting as a key resource for Texans dealing with a variety of challenges.
Texas’ large self storage inventory keeps rents much lower than in other major urban hubs
According to Yardi Matrix data for October 2020, Houston and Austin offer about 9.9 square feet of storage space per person while Dallas-Fort Worth and San Antonio residents get approximately 9.4 and 9.3, respectively — among the nation’s largest cities, only Charleston, SC, has more. And this compares very favorably with places like Los Angeles, San Francisco, Chicago and Boston, which all offer less than 6 square feet, while New York can only muster about 3.5 square feet. At the state level, Texas has the nation’s 2nd largest economy and is also second only to California in terms of total self storage provision, with slightly more than 200M square feet. However, it offers more than The Golden State per capita, almost 8 square feet as opposed to about 6. Only Nevada and Utah — with little more than a tenth the population of Texas — offer more per person.
In addition to quantity, storage space in Texas’s big cities is good value compared to other urban places of comparable size. The October 2020 average monthly street rate for a non-climate-controlled 10’x10’ unit in both San Antonio and Austin was $96, and it was even less in Dallas-Fort Worth and Houston, $93 and $84, respectively. These are bargains compared to the averages of $174, $187 and $197 charged in New York, Los Angeles and San Francisco, for example, and are also below the national average.
The evolution of the street rates in Texas’s biggest cities during 2020 has generally been following the national trend, and so a reversal of the falling rents of earlier in the year is now being seen.
In terms of annual totals of storage square feet constructed, Dallas–Fort Worth–Arlington took the #1 spot in three out of the last five years. Rates of construction have decelerated of late, but the total square footages of completed storage currently exceed 74M for Dallas-Fort Worth, 72M for Houston, and about 22M for both Austin and San Antonio. El Paso and McAllen have close to 7M and 6M, respectively, while the smaller cities — for example Corpus Christi, Lubbock, Midland-Odessa and Amarillo — all have less than 5M. This compares favorably with the approximately 35M and 46M square feet available in Los Angeles and San Francisco, while New York City offers even less.
Texas’s economy keeps residents renting self storage
Although the self storage industry has a reputation for resilience during downturns, it enjoys good times as much as any other. Recent Texas-related business announcements have included Elon Musk’s move to Austin, Oracle Corp’s intention to do the same, and retail giant Amazon’s plans for new sites near Houston, Austin and El Paso. And while the state’s legendary oil industry has taken a hit this year, its employees are tough and ingenious people, and with more demands now being made for environmentally-friendly energy, it has been reported that the Lone Star State is well-positioned to adapt its petrochemical plants to produce green fuels.
Texas’s welcoming attitude is seen in other ways as well. The supply of self storage facilities has been helped by lenient — or in some cases absent — building codes and zoning laws, allowing facilities to be constructed relatively easily. The state-wide zero income tax surely attracts businesses, and it is interesting to note that Austin and Dallas are rated as two of the three cheapest top US tech cities to live in. People with disposable income make good long-term self storage renters. And Texas remains a popular state, with a population increase of 15.3% from 2010-2019 that is only exceeded by Utah and Washington, DC, bringing new self storage customers who may need the service when moving.
The unadjusted unemployment rate for Texas was 6.6% in October 2020, a substantial drop from 7.7% in the previous month, way down from the peak it hit in April this year, and about the same as the national average. At the metropolitan level, rates in the areas centered on Austin and San Antonio were below the national average, at 5.1% and 6.3%, respectively, while those in the areas that make up Dallas-Fort Worth were between 6.0% and 6.2%. Among the state’s largest urban areas, only Houston-The Woodlands-Sugar Land had a higher unemployment rate percentage than the average across the country, at 7.7%.
Some of the reasons Texans love self storage
As Texas is a land of big open spaces — rivers, lakes, and over 300 miles of coastline — outdoor sports fans can be encouraged to use self storage for their equipment. An angler can accumulate a lot of tackle, canoeing, rock climbing and horseback-riding all require specialist equipment, and windsurfers like to bring their own boards when making a trip to the coast. For enthusiasts who live in limited accommodation, a self storage unit is an ideal place to put all their gear. The same goes for ATVs, and larger recreational vehicles such as campervans and motorhomes can be parked at many storage facilities.
Properties do tend to be bigger in Texas. In 2019, new apartments built in Houston and Fort Worth covered an average of 937 and 921 square feet, respectively, with only Jacksonville, FL, building bigger ones among the US’s largest cities. Dallas, San Antonio and Austin are also in this top 10. All these Texas cities’ 2019-built apartments are a bit smaller than those dating from 2010 — a trend also observed in most of the nation’s other large cities — meaning that storage space outside the home may be even more welcome now. While people with limited space use self storage for their possessions, a recent survey found that in fact those in larger homes are even more likely to use it.
Another reason Texans should love self storage is the weather. The hot and humid summers mean air-conditioning is essential in homes, but how many garages, attics and basements are equipped with it? Heat and moisture can easily damage clothing, furniture, and many other precious things, so keeping such items in a climate-controlled unit is a great option. In addition, self storage is often found to be very useful in the aftermath of the hurricanes Texas is prone to, and some operators see good business sense in offering free storage to those affected.
How the Texas self storage sector is adapting and changing
Austin self storage operators report how their businesses can adapt to challenging circumstances and their clients’ changing needs. It seems that more college students are renting units, perhaps while they are living in limited space with relatives until they can move back into campus dorms. And more RVs are being seen on the parking lots as well: after a tricky start to the year, the RV industry may be booming again in Texas, with people preferring to take vacations with those closest to them and not risking flying or staying in hotels.
Managers in the San Antonio self storage sector report that there is plenty of competition but business is strong. Some of their new clients need storage while adapting to smaller accommodation due to changing circumstances, while others are military personnel or newcomers moving into town, as has always been the case. Again, a comprehensive range of health protection measures and top-quality customer service are proving to be key, while offering services such as package delivery, trash access and free locks have been found to be effective marketing strategies at this time.
While the Texas self storage sector may certainly have seen plenty of new supply in recent years, this activity has adjusted down of late to avoid exceeding customer demand too severely. Jonathan Vollinger of Austin-based HPI Real Estate Services & Investments has said that the state’s markets may stabilize in a couple of years, with the current pandemic being a factor, and that they will probably be leaders in terms of how quickly they return to healthy levels of supply and demand.
With its thriving cities and large open spaces, Texas remains a symbol of generosity, and its self storage sector clearly matches up to that. Apartment-dwelling Texans can put their bulky sports gear in a regular unit until it is needed while a climate-controlled one is recommended for seasonal clothing and paperwork. Anyone moving to the Lone Star State can keep their belongings temporarily in a self storage unit, and those running a business there can use one as an overflow for raw materials or inventory. The industry offers Texans benefits in the current uncertain climate, and it looks to continue being an important service for locals and a profitable sector for investors. Happy holidays, y’all!