Thoughts on Renting Out Storage Space (Part 2)

Continued from Part 1.

Our physically closest competition among the big brand self-storage entities is the Public Storage at 2690 Geary Street, which I’ll call ‘Public Storage Geary’. In fact, it’s the only big brand storage facility for a large swath of San Francisco, which is why they often have no units available, and even when units are available they charge more than even the other self-storage facilities in the city, to say nothing of facilities outside of city limits.

We don’t charge nearly as much per square foot as the big brand self-storage facilities within city limits. We can’t, mainly for two reasons.

The first reason is that we only rent to people who intend to rent for a minimum of six months. We don’t write that into the contract – if after the first month it’s really not working for them, we want them to be able to leave without paying a penalty – but they have to tell us informally that they want to rent for 6+ months. This means we don’t rent to people who need temporary storage because they are moving or their house is being renovated or some other reason that lasts for less than six months.

The second reason is marketing. Brand recognition is a thing. Many people seeking to rent storage only look at the big name facilities, which means they get to charge higher rents. That’s not completely unreasonable. The big-name facilities are genuinely easier to find, and even when Public Storage Geary doesn’t have any vacancies, a storage facility somewhere else in the city probably has a vacancy. Renting from homeowners or other owners of small buildings is a thinner market – they may not have a vacancy at the time that someone is looking to rent. It’s also less standardized, which means that prospective tenants have to put in more effort to figure out if a space is suitable to them – or not put in the effort and take the risks. Finally, the big name facilities use gimmicks such as ‘$1 rent for the first month’ or ‘50% off rent first month’ to get tenants to sign a contract for an overpriced storage unit, whereas my mother doesn’t do that, and as far as I know, other small building owners don’t use such gimmicks either.

That said, even the smallest space we rent out is much larger than a storage locker. For someone who only wants to rent a single storage locker’s worth of space, renting a storage locker from a big brand storage rental facility, even though it will cost much more per square foot, is going to be cheaper than renting from us.

Our garage was rented to someone I’m going to call R for nine years. I don’t even remember what his face looked like, because he was never around and I almost never saw him. Unless he was only accessing the garage at night and doing it so quietly that he never woke anyone up, that means he wasn’t accessing the garage, which meant that he probably was not using the stuff stored in the garage very much.

My mother decided that, after nine years, it might be time to raise the rent. She gave me the task of researching rents for storage units in San Francisco, and I came the conclusion that, yes, the garage was being rented below market. So she raised the rent. R was not happy, because nobody is ever happy when their rent goes up. He ultimately decided to move out rather than pay the increased rent. We were really curious where he was going to move his stuff, since even after the increase in rent, it was still a better deal than anything we could find advertised in San Francisco. If he had found a better deal in the city, my mother might have made a counteroffer. Then he told us that he was just getting rid of the stuff because he never used it anyway.

Even though we lost a reliable tenant, my mother insists that it was a good thing that she raised the rent and got R to move out, because if he had just been renting the garage out of habit and it wasn’t benefiting him, it was wasteful for him to have the garage instead of someone who could really use the space, and it was also wasteful for him to keep paying us. Eventually, we did get a new tenant at the higher rent, though considering the effort it takes to get new tenants and that the garage doesn’t bring in any money when it’s vacant, I think raising the rent on R did not financially benefit us (this is assuming he wouldn’t have decided to move out of his own accord even if we hadn’t raised the rent).

If you pay attention to books/podcasts/blogposts/etc. about decluttering/organizing/minimalism/etc. you are aware that R matches the stereotype of the storage unit tenant who wastes money on storage ever month because they cannot bring themselves to discard things which are not contributing to their life, such as items which belonged to deceased family members which they don’t want but also feel guilty about discarding. According to such media, the vast majority of storage unit tenants are like R, and the ones who aren’t are the exception. That may be true of the big brand storage unit facilities – I know little about how their tenants use their spaces – but as far as our tenants go, R was in the minority.

You know who is the most common type of tenant we have? Small business owners. They are happy to promise to stay for 6+ months, especially if that promise is not contractually binding. They are willing to put an effort into finding spaces which charge the lowest rent per square foot, so they are more likely to find us than someone whose aunt just died and they want a place to store her possessions until they figure out what to do with them and is too overwhelmed to find the best deal, and they are willing to pay higher rents in exchange for not having to look very hard for storage space. As long as their business remains viable, they are very reliable tenants, which means they stay for a long time.

Over the years, I have seen that there is actually quite a range of ways to use a storage space. For example, we once had this painter who used the storage room as her private art gallery, and sometimes invited people to come in and see her paintings. We also once rented out to a theater company which used the space for costumes and props storage.

This is how I know that, if everyone became a minimalist and committed to only owning material things which provided a high level of benefit to their lives, there would still be a market for storage space rentals. The small business owners who need storage space to operate their businesses would still rent storage space. Some painters who consider painting to be a very meaningful part of their lives, even after becoming minimalists, would still be interested in renting gallery space. And so forth.

If everyone became a minimalist, wouldn’t that also mean that many more homeowners would have empty garages/basements to rent out? Yes, but I doubt they would go that far if they weren’t under financial pressure. My mother only got started on renting out the garage/basement because of financial pressure, and I just don’t see how someone who is already content with their financial situation would start. (It is way easier to continue doing something one has been doing for decades than to do something one has never done before). We also have a basement layout which is suited to rentals. Many houses in our neighborhood have been renovated to remove walls from basement rooms to expand the garage. Our house was never renovated that way, so we have the original layout of a small garage and multiple basement rooms – it’s much easier to rent out smaller spaces which can be individually locked than either a single large garage or a portion of a large garage which cannot be separated locked. (Ironically, the fact that the basement/garage had never been ‘improved’ probably lowered the property value and the price my mother paid for the house, even though it is better for generating income). And even those homeowners who start renting storage space because of financial pressure and whose garages/basements lend themselves to renting would still have the learning curve of how to do it.

Having been on the ‘supply’ end of storage space has shaped my perspective on the storage of stuff. I have a much better sense of the value and costs of storage space than I would otherwise. And if you somehow managed to reach the end of this post, I hope you have also gained some insight.