Jeff Daugherty knows that most people have too much stuff or not enough storage space.
Typically, it’s a combination of both.
That’s why Daugherty and his business partner, Jim Wills, have invested $4 million to expand their self-storage company located along Highway 14 in the town of Middleton, about a half-mile west of Costco.
The Storage Guy’s new additions include an outdoor paved parking lot with 200 spaces — each 11 feet wide and 40 feet long — for campers, cars and boats and is surrounded by security fencing with a pin-controlled gate.
But the bulk of the improvements are in indoor storage. The expansion involves 105 units ranging in size from 12- to 28-feet wide and 30- to 40-feet long, with overhead doors from 10-feet to 14-feet high. Each have power for trickle chargers, professional pest control, are monitored by security cameras and help meet a growing demand for storage from consumers who have run out of room for their toys and other belongings.
“People are in love with their stuff,” Daugherty said. “These storage spaces have become an extension of their home.”
Storage industry booming
A two-car or even three-car garage for many people is simply too small for their needs, which can include all-terrain vehicles, snowmobiles and boats. In some cases, the family garage is stuffed so full that it rarely hosts a car. Basements are increasingly being converted to living spaces, and many neighborhoods restrict what can be parked in a driveway or alongside a house. Some covenants prevent homeowners from building backyard storage sheds.
With more people moving to urban areas and baby boomers downsizing to condominiums but still staying active, the need for self-storage continues to grow and has turned the industry into a major player in commercial real estate. Self-storage units have been around for decades, but over the past 10 to 15 years, the quality of the accommodations, along with the prices and demand, have been on the rise.
“It’s actually doing quite well as an industry,” said Rob Yohnk, president of the Wisconsin Self Storage Association, which represents 315 owners who have 410 storage facilities. “A lot of people are doing expansions or building new facilities. Part of what’s driving it, beyond the obvious that people have a lot of stuff, is the less obvious answer that as we become more of an urban society, people have less space.”
According to the Self Storage Association, a national lobbying organization founded in 1975 to advocate for the industry, 68 percent of all self-storage renters live in a single-family house, while 27 percent live in an apartment or condominium. Of all renters, 65 percent have a garage, 47 percent have an attic and 33 percent have a basement.
There are more than 58,000 self-storage facilities in the U.S., with nearly 2.5 billion square feet of space that generates more than $22 billion a year in revenue. Most units are relatively small. The SSA reports that nearly half of the units rented are either 10-by-10 or 10-by-20 rooms, for an average of $96 or $137 per month, respectively.
In Wisconsin, the average monthly rental cost for all storage units has risen to $81 in 2017, up from $62 in 2010, according to SSA data.
“They don’t have places to store the Christmas decorations in the off season, the lawn mowers or cars,” Daugherty said. “There’s quite a few (storage facilities) around, but the need exceeds the availability.”
U-Haul plays big
role in market
The Madison area is home to thousands of units in dozens of storage facilities scattered throughout the region. They include East Towne Storage, 1947 Winnebago St.; Beltline Self Storage, 40 W. Beltline Highway; Badger Self Storage, 4302 Commercial Ave; Stuff-N-Store, located on Cottage Grove Road near Stoughton Road, and the 100-unit Freeport Road Self Storage near Verona and Hammersley roads that opened in 2014.
One of the biggest players in self storage is U-Haul, which continues to expand its presence in the area.
In 2011, U-Haul converted the former Cub Foods on Verona Road into a U-Haul Moving & Storage center. It includes more than 500 units, most of which are inside the building that closed as a grocery store in 2009. On the city’s North Side, a 119,000-square-foot former manufacturing facility at 2701 Packers Ave. is being converted by U-Haul into a storage center that will ultimately have 900 units, both climate and non-climate-controlled but all housed within the building, said Carolyn Henderson, the center’s manager.
Meanwhile, in West Baraboo, U-Haul is converting a former strip mall property into a storage and rental center that will include a 175,078-square-foot space for indoor climate-controlled self-storage units with high-tech security features.
“The constant challenge is getting people to pay,” said Yohnk, who owns 424 units in Clear Lake, Cumberland, Rice Lake, Sommerset and St. Croix Falls in northwestern Wisconsin. “It’s pretty regular.”
About 10 percent of his customers get a late notice that is sent out when their bill is seven days past due. Those who don’t respond after 21 days will have their unit locked.
Yohnk said that while he has between five and 10 lien sales a year, what remains in a storage unit after someone refuses to pay isn’t typically worth much. He said it doesn’t represent the finds on Storage Wars, a nationally syndicated reality television show in which the contents of storage units are auctioned off to the highest bidder.
“In our neck of the woods, people don’t store that kind of stuff,” Yohnk said.
Daugherty said he has few defaults from his customers, whom he carefully vets and meets in person. They include homeowners, people moving in or out of a home, those living temporarily overseas, college students in transition, construction companies, car collectors, anglers and hunters.
‘Very stable investment’
Daugherty has worked in commercial real estate for more than three decades and got into storage units in 1996 after he and Wills bought some land along Highway 14 as an investment. Their expansion, which broke ground in June and was completed in late December, adds to his company’s growing roster of storage options. They also own a neighboring 136-unit storage facility built in 1997 and a 4,000-square-foot shed that is currently fully rented by a business.
“We wanted to generate income, and that’s how we came up with storage. It’s a very stable investment,” said Daugherty, 56. “The little bits and pieces that are storage are less risky (than office space), but they generate serious income.”
Daugherty and Wills own a variety of storage facilities designed to meet just about any need.
They have a site at 6814 Schneider Road that includes some larger climate-controlled units, which better protects items from damage, with monthly rents of $485. The same 14-by-45-foot unit without heat, air conditioning or humidity controls rents for $245.
The company also has 50 rental units and 42 climate-controlled storage condominiums near the intersection of highways 12 and 19 in the town of Springfield. The setup allows customers to buy the condo unit and either rent it out or use it for their own needs for things such as high-end sports cars, motors homes or collectibles. A 15.5-by-49-foot unit with a 14-foot overhead door and 100 amp electrical service sells for $74,900.
“I saw the need for storage, and I just fell in love with the business,” Daugherty said. “There’s a such a wide demographic that rents storage.”