SELF-STORAGE SURGE
Because ‘people don’t like to get rid of stuff,’ metro area seeing boom in construction of storage units
“It’s just our culture. People don’t like to get rid of stuff.” Sean Delaney, Chicago-based executive with real estate brokerage Marcus & Millichap
About three years ago, Alice Donohoe, then moving into her late 50s and ready to downsize, rented a storage locker.
Actually, she rented four of them — large ones. Each, she said, was nearly the size of a semitrailer.
When you raise 10 children and have a big house in which to stash all the things that come with them, the heap can get pretty high.
“I used to chuckle at people who had so much that they needed storage,” Donohoe said. “And here I am, one of the accused.”
Self-storage, long the humblest member of the commercial real estate family, is on a roll.
Construction spending on self-storage nationally has quadrupled in the past
two years, far outpacing nearly every other type of non-residential real estate in percentage terms, and besting most in raw dollars.
Locally, the Milwaukee area has seen a boomlet in self-storage facilities, including some that add a bit of sheen to a sector communities sometimes have shunned as undesirable.
Some of the new places are ground-up construction, but many are conversions of buildings that had gone vacant — a foundry, a movie theater, two supermarkets, a candy-making operation, a printing plant and the shuttered HarleyDavidson factory on Capitol Drive in Wauwatosa.
Data from Pac-Comm, a McLean, Va., firm that tracks the industry, shows the number of selfstorage facilities in metropolitan Milwaukee has increased from 139 to 153 since 2015. A tally by the Milwaukee Journal Sentinel, meanwhile, found that 23 new places have opened over that span.
In downtown Milwaukee, two new facilities, with about 2,000 lockers between them, stand just a mile apart.
In Milwaukee’s Riverwest neighborhood, national players U-Haul and Extra Space directly face each other across East Capitol Drive. Donohoe’s place, U.S. Storage Depot, which is undergoing its third expansion in less than four years, is two blocks north.
Prices across the area vary. For a 10-foot-by-10foot unit, a popular size, advertised rates at more than 20 locations ranged from $60 a month to $161 a month.
“It’s amazing how that industry has grown,” said John Stibal, development director in West Allis, which has seen the addition of two new self-storage places since 2016 and is about to get another, in an industrial building on West Burnham Street.
“Self-storage has come a long way. Most new self-storage projects are retail-looking, and a lot … are on busier streets and are closer to their customers.” Alex Simic, Owner of Storage Master LLC
Demographic drivers
Multiple factors are driving the nationwide growth, said Ben Vestal, president of Coloradobased industry investment advisory firm Argus. Among them: retirement-age baby boomers downsizing from large homes, an increase in the number of apartment dwellers and a dearth of new construction of selfstorage following the onset of the Great Recession.
“From 2008 to 2011 there were essentially no new storage facilities built, and there were a lot of storage customers being created during that time, so there was a big pent-up demand,” Vestal said.
Southeastern Wisconsin recently saw the entry of publicly traded real estate investment trusts Extra Space, Life Storage and CubeSmart.
Extra Space has been especially active. Two years ago, the Salt Lake City-based firm had no facilities here. Now it has seven, including one in the former Northtown Cinema on North 76th Street, and a 900-unit location in the former Pabst Brewing distribution center downtown.
Life Storage, meanwhile, opened in 2016 in a seven-story former warehouse at 420 W. St. Paul Ave., and CubeSmart moved into what once was a supermarket in Kenosha.
It’s all part of the American way.
According to data from the U.S.-based Self Storage Association and from the Federation of European Self Storage Associations, we have nearly 50 times the self-storage space per person of Europe as a whole, and 25 times the amount in the most-affluent countries such as Denmark, Norway, Switzerland and the Netherlands.
“It’s just our culture,” said Sean Delaney, a Chicago-based executive with real estate brokerage Marcus & Millichap and a self-storage specialist. “People don’t like to get rid of stuff.”
Donohoe knows that. When she first rented space at U.S. Storage Depot, 4200 N. Holton St., she brought the furniture, clothing, dinnerware, books and children’s items that had piled up over decades.
“I was downsizing and I couldn’t take everything with me, so my thought was if I put it in storage I could go through it at my leisure and decide what I wanted to keep and what I wanted to get rid of,” she said.
She has given away much of the excess to charities and needy college students, and is down to a single, 40-footby-10-foot unit, which still harbors a daunting inventory ranging from a pleated skirt she wore at age 2 and dozens of bankers boxes stacked several high to a large chest her Uncle Sidney brought back from World War II.
From among the accumulation, Donohoe has been selecting keepsakes for eventual presentation to her children.
“My plan is to put some bins together and when the kids buy their first home that will be their house-warming present from me,” she said. “And at that point, I don’t care what they do with it.”
Donohoe figures it will take her about a year to finish her project. By then, the area could have still more self-storage space.
More capacity
At 76th Street and Oklahoma Avenue on Milwaukee’s southwest side, a former office building is being turned into CubeSmart self-storage. On the west side, the new owners of an eightstory building at 3742 W. Wisconsin Ave. are planning to fit it out with more than 800 self-storage units.
And Brian Fisher, business development manager at New Berlin contractor Anderson Ashton, said the firm has built about a dozen self-storage facilities in the last few years and is working on plans for several more.
The area growth includes several examples of the new wave of selfstorage — climatecontrolled buildings with drive-through access, lockers along interior hallways and design touches that have softened municipal opposition to what in the past often has been considered unattractive development.
“Self-storage historically was regarded as the Cinderella stepchild of real estate. … Most operators would build skinny metal buildings and didn’t take care of them,” said Alex Simic, owner of Storage Master LLC, which has nine area locations totaling about 5,400 units and a million square feet — double the square footage of five years ago.
“Self-storage has come a long way,” Simic said. “Most new self-storage projects are retaillooking, and a lot … are on busier streets and are closer to their customers.”
Simic is looking to open another location, and he believes some pockets of the area remain underserved. But area-wide, he said, supply is catching up with demand.
“Milwaukee’s getting pretty saturated,” Simic said.
Ken Breunig, owner of EZ Self Storage, which has nine locations totaling nearly 3,000 units, sees much the same thing. While the business remains profitable, the influx has dampened occupancy rates, Breunig said.
“We used to stay pretty full,” he said. “Now I’d say we’re probably running 85 to 90 percent.”
All the same, Delaney, who represents both buyers and sellers of properties, said storage remains a good business, in part because of its stability.
“People use storage in the good market, and they use storage in a down market,” he said.