Texas Opened the Door for the $27 Billion Self-Storage Industry

Texas is the birthplace of the self-storage industry. And as the state’s population grows, so does the need for people to store their stuff.

By Joy DiazApril 14, 2016 10:44 am|

If, like Asleep at the Wheel, you’ve seen miles and miles of Texas, then you’ve probably seen dozens and dozens of self-storage businesses. Texas has the most of any state. I’m on my way to Leander, Texas and I’ve already seen a few. That’s because, as it turns out, Texas is the birthplace of the self-storage business.

In Leander I arrive at Big and Safe Self-Storage. Pat MacAleenan and Candace Stroope manage the facility. Lots of heavy machinery surround the property – that’s because virtually the entire city of Leander is under construction.

“It was quiet out here for years and years – but I would say – what Candace? In the last three years? Yeah – it’s going crazy!” MacAleenan says.

“They are putting in office buildings with no anchor tenant in anticipation that they are going to get it filled and they’re doing it – you know?” says Stroope.

“And new buildings are popping up all [over], new homes, if you go north of here, there’s a new high school that is being built.”

Leander is not unique – the entire state, for that matter is growing by leaps and bounds. That’s one reason Texas has seen a disproportionate growth in the self-storage market. Pat MacAleenan says the massive and constant movement of people through the state means they need places to stuff their stuff.

“‘We are only going to need it for a month,’ is what they typically say. And then we smile and say ‘Well, that’s good because it is a month to month lease.’ And then the next thing you know, two and a half years have gone by,” MacAleenan says.

It’s easy to see why the business is so profitable. Unlike most everything else, self-storage owners only need to make one big investment at the beginning: they need land and they need buildings. Once their debts are paid off, though, the operating costs are minimal and the returns can be huge.

Paul Darden owns Darden Interests Inc. in Dallas. He’s not only a self-storage owner, but also a history aficionado.

“Self-storage concepts or parts of it have been around for 2,000 years,” Darden says. “[The] Chinese used to burry clay pots under the ground with people’s things on it and called it self-storage.”

True, many cultures stored things, from the Egyptians to the Incas. But the concept of facilities with roll-up doors and that kind of thing started in Odessa in the 60s.

“The gentlemen who started it, named Russ Williams and Bob Maund, needed to solve a problem in the oil industry out in Odessa. They needed to have quick access to certain pieces of equipment in the event of a blow-out something that might go wrong in a well,” Darden says.

Funny thing is, people from the community also liked those mini-warehouses. They would come and ask if they too could use a spot. An industry was born – an industry that Darden believes still has the potential for exponential growth.

“In the United States, only about one out of every 10 households uses self-storage,” he says. “And that being the case that means nine out of the 10 are not.”

Back in Leander I ask MacAleenan what sorts of treasures are worth storing.

“Everything from their dishes and clothing – I swear there are more ficus trees – fake ficus trees and fish tanks stored out here than you care to know about!”

Every so often, though, she finds a treasure, like the one left behind by a man who lost everything during the financial crisis. Things got so bad for him that he stopped paying for his storage unit. Eventually, MacAleenan auctioned everything off, but she kept one thing – and it wasn’t a rare baseball card or a classic car. It was a scrapbook.

The man is back on his feet and MacAleenan says she recently ran into him. She gave him the scrapbook, and he told her that was the only thing he truly missed from all of his losses. That day she knew there are always things worth saving.