Self-store units balance slump to still fill their spaces

NEW YORK -- It's a pack rat's market.

The recession hasn't squeezed businesses that help people store stuff — yet. But as the summer peak season nears, self-storage operators are expected to offer discounts to keep their units full.

"The industry is going to give concessions," says Paul Puryear, director of real estate research for Raymond James. "They will try to lure people in and offset some movement by offering more discounts."

They're watching the summer, when occupancy jumps 4 to 5 percentage points, to see how they'll ride out the downturn. The $20 billion industry has held its own, but the economic carnage came after last summer.

So far, "The industry has showed it's not recession-proof, but it is recession-resistant," says Robert Schoff, president of the Self Storage Association, who says year-to-date occupancy is down only about 5 points to 75%.

Customers who've yanked old couches and baby cribs from the cubes to save money have been replaced by folks who had to downsize because of home foreclosure or job loss.

"The housing downturn by some accounts has actually put some business into self-storage," says Puryear. "What we are trying to measure is how severe an economic downdraft it is going to take before we have people abandon their self-storage."

Americans typically spend $100 to $120 per month for an extra 100 square feet of self-storage space at the 52,000 facilities nationwide. Americans' love for stuff has helped the industry grow from 200 million to 2 billion square feet in the past 20 years, even as the median home size grew 10% to 1,769 square feet.

"In the good economy, we had 15% of customers with discretionary income who were storing third and fourth cars with us," says Dean Jernigan, CEO of U-Store-It. "That business is down very close to zero."

Need is driving business now. "People unfortunately still are moving down the housing ladder, Jernigan says. "The have more in the way of possessions than will fit in a smaller house, an apartment or in with parents."