People in the U.S have way too much stuff — that’s a criticism heard not only from out-of-country sources, but from voices within the borders of the 50 states. We here at PYMNTS will leave it to others to hash out the truths of that view, but here is one thing we know: All that stuff is creating a tremendous opportunity for self-storage operators, especially those who know how to get the attention of younger consumers.
That’s the impression taken away from a recent PYMNTS discussion with Joseph Woodbury, CEO at Neighbors.com. The company aims to bring digital and mobile efficiencies to the self-storage industry, and do so in a way that can be described as — please excuse the cliché, as workable as it is — an Airbnb for self-storage.
“It’s a massive, massive industry,” Woodbury said of self-storage in the U.S., “and demand is outstripping supply.” Indeed, one of the most recent and reliable estimates of self-storage in the U.S. puts the number of units at 50,000 or more, which translates into about 2.311 billion square feet that consumers can rent for their stuff. The industry has grown nearly 8 percent since 2012 and accounts for more than 120,000 jobs. Nearly 10 percent of people in the U.S. use self-storage, with the average monthly rent about $91 — a figure that promises to increase as more demand for self-storage emerges, something predicted by experts and also by Woodbury.
Not only are millennials turning to self-storage at a higher rate than their parents, he told PYMNTS, but the excess demand means many self-storage operators feel free to skimp on customer service, security and anything resembling even basic insurance. Not only that, but one in 10 self-storage units — many located in sketchy, low-populated manufacturing or post-industrial areas — are broken into each year. And, according to Woodbury, that’s where digital operators can take advantage of the opportunities offered by all those trends.
“There is big room for disruption,” he said.
No doubt — that’s why other young companies are striving for a piece of this market. Take a company called Roo, which is a peer-to-peer (P2P) platform that connects those with extra space in their homes or businesses — such as a garage, basement or bedroom — to those in need of storage. If renters are in Roo’s geographical markets, they can visit its website to browse listings for storage.
It’s About the Neighborhood
So how does Neighbors.com envision disruption in this particular area of payments and commerce?
The general idea is the “neighbors” angle — storage in relatively safe, and often well-known areas. A consumer might book self-storage in a house or garage or backyard shed located within walking distance — or a short ride – from that user’s own home. As Woodbury tells it, after price, proximity is the main thing self-storage consumers look for when booking space. “Some of the most popular spaces are garages,” he said.
The company enables people to list their available self-storage space, along with any amenities — that might be a security camera, for instance, or the assurance of climate control, along with the space available. The company also offers the service of pro photographers to help listers better market their spaces online.
Not only do people who list on the site stand the chance of making what Woodbury called passive income, but they could, in his telling, use the service to help pay for home improvements. Consider a listing for a storage space in a home’s unfinished basement. “We help them earn the money to be able to finish that basemen in five years,” he said. Of course, the money could go toward the mortgage or whatever else is thirsty for fresh funds.
Different people have vastly different relationships with their belongings, and that applies to visitation time for items stored in properties listed by Neighbors.com. Some of us are clingy — and some listings offer 24/7 access to please consumers with that desire, Woodbury said. Some of us will miss our belongings but are less devoted — property owners can offer visitations during business hours. Some us are indifferent and perhaps even cruel when it comes to the emotions of our belongings in storage — the company’s “appointment only” option would likely appeal to such customers.
The Really Big Thing
The really big thing — well, bigger than self-storage visiting hours, at least — is the insurance option, according to Woodbury. The company foots that bill, baking it into the pricing, underwriting policies with what he described as a major national insurance underwriting. Self-storage customers are protected up to $25,000, with storage listers having policies of up to $2 million, separate from their homeowner insurance policies. The relatively safe and crime-free environment of most residential areas where the company operators has helped it secure the insurance aspect of the business. “We have negotiated extremely good rates,” he told PYMNTS.
Woodbury told PYMNTS that the company — which started in Salt Lake City, has since spread to the West Coast and now is eyeing major East Coast expansion — has not run into any zoning issues that would hamper its business model. He said residential storage has generally been acceptable at the municipal level, which works in favor of Neighbors.com.
Get ready for more movement, innovation and disruption in this space. Self-storage might not be as American as apple pie, but it’s pretty close, and as consumers become ever more mobile, good parts of this industry is sure to respond in kind.