Why do so many self-storage places keep popping up in Austin?

Ben Hamill was confused. Down the street from his house in Brentwood, a building was going up, and he and his wife couldn’t quite place what it was. It looked like an apartment or a condo, as far as they could tell, with floor-to-ceiling windows, some cubist-looking eaves and all the trappings of a typical condo. Then one day they saw the sign: STORAGE.

CubeSmart Self Storage on Burnet Road was the latest in a salvo of storage facilities that have popped up in Hamill’s North Austin neighborhood – including the brand-new Extra Space Storage that just opened on 51st Street and yet another Extra Space Storage on Burnet Road.

That got Hamill curious, so he asked KUT’s ATXplained project:

Why are there so many self-storage places popping up all over North Austin? Is there really a huge demand for them?

The self-storage business is booming in Austin. Last year, the city’s supply of rentable storage space grew by 9.5 percent, the fastest rate in the country, according to Union Realtime, an industry analyst.

Hamill said he’s not opposed to the storage sites, per se, he just doesn’t see what value they’re adding to his increasingly car-dependent neighborhood.

“If you have to pass two self-storage units and a condo with no retail on the bottom between getting to places you actually want to go, that’s like a long walk of not much, and it discourages that walkability,” Hamill said.

He said he has a theory for why so many are popping up recently. It’s simple: They’re relatively easy to build, they don’t need much staff to operate and they’re ideal for flipping as property values rise.

“That’s a cynical take, and I’ll be disappointed if that’s the case,” he said.

Bill Bellomy owns an Austin-based real estate brokerage company that finances and develops self-storage facilities in the Austin area and across the U.S. He said Hamill’s right, at least about the boom and the upkeep costs of storage sites in Austin. The facilities are relatively cheap to maintain and operate, but he’s not necessarily convinced developers are building them to hold on to the land.

“It’s getting so much more expensive ­– as far as the dirt – the cost to build,” Bellomy said. “The returns are good for developers. Storage, a lot of times, is the best, with the highest returns for these properties.”

The land alone can cost in the tens of millions of dollars, he said, so developers are building nicer, multistory facilities with more amenities – things like climate control, 24-hour access and floor-to-ceiling windows.

For customers, those amenities mean higher rates.

Last year, Austin’s average self-storage rate was $102 dollars a month – the most expensive in Texas, according to SpareFoot, an online marketplace for finding and tracking storage space. That’s about $20 more a month than Dallas, San Antonio or Houston.

Alexander Harris, SpareFoot’s online editor, said that while Austin’s seeing above-average rates for storage, the industry has taken off in the last few years.

“Nationwide it is blowing up,” Harris said. “If you look at the construction spending data from the U.S. Census, 2017 would be the biggest year on record for self-storage construction.”

According to SpareFoot, U.S. spending on storage has jumped steadily from about $400 million in 2010 to $3.6 billion last year. Harris said the biggest driver in that growth has been pent-up demand.

“Right after the recession a lot of builders – they just kind of stopped doing it. (Storage space developers) couldn’t get financing to build new facilities, and people were moving out of their storage units to save money,” Harris said. “So you had this period of three to five years where they just weren’t building new storage facilities.”

And, Harris said, there’s probably still room to build more storage space in Austin for now – but construction will likely slow down sometime soon.

“If it’s not at its peak, it’s very close.”

But, Austin has other factors driving demand for storage that aren’t likely to let up anytime soon. Namely, soaring growth and real estate prices.

David Steinwedell, president and CEO for Affordable Central Texas, a nonprofit that focuses on preserving middle-income housing in the Austin area, said the rapid growth of self-storage facilities in Austin is perhaps the most visible sign of how unaffordable housing has become in the metro area.

“Having such a tight housing market is probably driving the huge amount of demand for the self-storage space,” Steinwedell said.

He said Austinites are faced with either moving farther away from Austin and commuting or downsizing to a smaller, more affordable place – without a lot of storage space.

“If you’re downsizing to maintain your rent level, at some point you’re going to end up with stuff that doesn’t fit,” Steinwedell said.

Hamill said that makes sense, though, he added, the answer is somewhat lacking.

“It just feels like something better could be done with that land,” he said.

This story was produced as part of the Austin Monitor’s reporting partnership with KUT. Photos by Gabriel C. Pérez/KUT.

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