Self Storage Industry is Metric for the Economy’s “Wellness”

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When you eat too much food, the body stores those extra calories in fat cells. If you keep overeating the body becomes obese and starts to break down with diabetes and other nasty ailments. If those symptoms don’t deter the overeating, the body will eventually fail…game over. Our economy and society is like a living body, it requires a balanced diet of saving/investing and consumption to remain healthy. Two much saving/investing (like eating too little) will starve the economy’s growth and lead to unemployment. Conversely, too much consumption (like eating too much) will over inflate demand and increase debt leading to economic bubbles (sound familiar). So too much of either and the economy becomes like an unhealthy malnourished or obese body.

While there are numerous metrics to measure the wellness of the economy, I suggest looking at the self storage industry as an ideal metric for measuring over consumption specifically. If we’re not over consuming, we shouldn’t need excess self storage facilities (like fat) beyond a certain minimum level required to handle things like military personnel, people in transition, and small business inventory/equipment. Since there can’t be negative self storage space, the industry is not a relevant metric for saving.

For years I watched with wonderment the growth of the self storage industry. It seems people were storing excess goods (read “unused crap”) everywhere in larger and larger amounts; and self storage is not cheap. So not only were we buying much more than we could use and consume, we were spending money on storing it that should have been put into savings. 

According to the not-for-profit Self Storage Association, there are currently over 52,000 self-storage facilitates with an average 45,800 sq. ft. of rentable space (that equates to approximately 2.35 billion sq. ft.) Sales for the industry are estimated at more than $20 billion. Here are some other facts from the SSA:

–At year-end 1984 there were 6,601 facilities with 289.7
million square feet (26.9 million square meters) of rentable self storage in
the U.S. At year end 2008, there
are 51,250 “primary” self storage facilities representing 2.35 billion square
feet — an increase of more than 2.0 billion square feet.

–During the peak development years (2004-2005) 8,694 new self
storage facilities (approximately 480 million square feet of space were added).

–It took the self storage industry more than 25 years to
build its first billion square feet of space; it added the second billion
square feet in just 8 years (1998-2005)

–There is a self storage space inventory of 20.8 sq.ft. per
U.S. household (or an extra closet).

–There is 7.4 sq.ft. of self storage space for every man,
woman and child in the nation; thus, it is physically possible that every
American could stand–all at the same time–under the total canopy of self
storage roofing.

The self storage industry growth trends over the last 20 years correlate closely to our over inflated GDP in the US, which was caused by over consumption (spurred on by lose credit, etc.). This is especially true over the last 8 years. What I find really hard to understand, is while we were building larger houses and buying (consuming) more of them to store stuff in, self storage was still growing exponentially.
While military personnel rent approximately 4% of self storage units, another 4% is occupied by those in transition and a further 5-10% is used for small business inventory/equipment storage, that leaves 80% (1.88 billion sq ft.) for the average American storing excess “stuff” that is rarely used. You can’t blame the self storage industry for growing, the industry is growing because of demand to store excess fat–just like our waists.
America’s economy is obese and sick, but with a better balanced diet of saving and consumption we can get back to health. I’ll know when we’re on the right path when self storage facilities start going under (sorry, nothing personal to the self storage industry, but you’re a symptom of our over consumption). Now if we can just work on American’s personal wellness and get back into physical shape before the healthcare system implodes…but that’s a topic for another blog.

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2 Comments

  1. Dr. Girlfriend
    August 6, 2009 @ 2:53 pm

    20.8 square feet does not equal a 2 car garage.
    You failed to mention the jobs the self storage industry creates.

    Reply

  2. Kyle Murphy
    August 7, 2009 @ 8:20 am

    Thanks for the catch on the data. I had put two sources together and not edited it properly. Regarding jobs, by dollar volume and profit margin the industry creates relatively few jobs compared to many other industries, and of the jobs it creates, most are low paying without benefits. If our economy was really just about creating jobs, we should get rid of mechanized farming and get everyone working in the fields. The jobs creation angle is generally a poor economic argument made for political and PR reasons, and doesn’t hold up to epistemological scrutiny. Natural disasters and crime create jobs as well, but that doesn’t mean they are good for the economy. A better argument would be for the storage industry to explain it’s value to the economic system holistically–on a whole does it add or subtract from the country’s economic well-being. I’ve yet to see any data that it adds to our economy significantly and indirectly, our country’s large-scale storing of mostly unused goods is a sign that we used our resources poorly.

    Reply

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