Occupancy rates rising at self-storage facilities in region
The self-storage industry in northern Nevada paralleled the decline of residential homebuilding during the economic downturn, but storage facility owners and managers say the industry has returned in force in the past 18 months.
Self-storage was the hot ticket during the building boom in Greater Reno-Sparks and across the nation. The industry nationally reached a billion square feet under roof in 1997, the Self Storage Association says, but from 1998 through 2005 another 1 billion square feet of storage space was added.
New facilities cropped up all over Reno and Sparks, but as the region’s economy collapsed so did demand for personal storage. The return of residential homebuilding and the declining unemployment rate in northern Nevada has some storage facility developers back on the move.
The Len family opened Pyramid Self Storage at Roberta Lane in Sparks six months ago, and the facility already is more than 50 percent occupied. Jeff Len says that developing the site — 429 units comprising approximately 69,000 square feet with an on-site office — took three years to complete.
“As we went through the entitlement process, we saw prices and occupancy rise,” Len says from his firm’s offices in Roseville, Calif. “It kept us on the right track as we were proceeding. Now self storages around us are sending us their overflow.”
Pyramid Self Store is the Lens’ first storage project in northern Nevada, but the family did manage facilities in Reno and Carson City on behalf of Umpqua Bank, which took them back during the downturn.
The Len family has a long history of development in the area. It developed the Raley’s shopping center at Pyramid Way and McCarran Boulevard, as well as the office buildings on Roberta Lane — the street is named for Mark Len’s mother.
The rapid rise in occupancy at Pyramid Self Storage has the owners moving forward on a second phase of development that could add another 15,000 to 20,000 square feet of storage space.
“When we hit the 50-percent mark, in terms of typical industry standards that far exceeds the norm,” Mark Len says. “Projections that were given to us early on in the feasibility studies that were done projected an 18- to 24-month timeframe to fill up the facility. Our goal is to be 95-percent occupied by the end of this year, and at the pace we are going we are very comfortable that we will hit that.”
A lot of the rise in occupancy at self-storage facilities, says Connie Obos, property manager for Northwest Self Storage on Fourth Street in West Reno, is from small businesses that are expanding.
Northwest Self Storage is running 98 and 100 percent occupancy, Obos says. Occupancy began trending upward in the middle of last year. New and longtime business tenants typically store extra furniture, records, company vehicles or construction trailers.
“A lot of them are renting parking spaces for company vehicles or multiple units to store extra supplies instead of storing at their office,” she says. “It is a lot less expensive for a doctor to store extra waiting room furniture here. People see the value in that, businesses especially.”
The most popular storage unit sizes range from 50 to 200 square feet.
The Self Storage Association says that total storage space in the United States in the fourth quarter of 2013 was 2.3 billion square feet, or more than 78 square miles of storage space under roof. Nationally, average revenue per square foot in the first quarter of 2013 was $1.12 for non-climate-controlled units and $1.42 for climate-controlled space. Asking rents for a 100-square-foot unit was $115 a month, or $146 a month for a climate-controlled unit.
Nationwide occupancy in the third quarter of 2013 was 87 percent. More than 172,000 people are employed at self-storage facilities, the SSA says. More than two-thirds of storage renters live in a single-family household.
With median home prices topping $500,000 in Reno and nearly $520,000 in Minden/Gardnerville, 2021 is shaping up to be quite the sellers’ market for Northern Nevada. As for housing supply, that’s another story, reports the NNBW’s Kaleb M. Roedel.