Self storage: Inside the new real estate war to stash your stuff - Macleans.ca
 

Self storage: Inside the new real estate war to stash your stuff

The self storage industry in Canada is booming and going to extreme lengths to stash your excess stuff


 
The Apple Self Storage building on Adelaide street west in Toronto, ON. (Photograph by Cole Garside)

The Apple Self Storage building on Adelaide street west in Toronto, ON. (Photograph by Cole Garside)

The basement, wrote the French philosopher Gaston Bachelard in The Poetics of Space, an architectural treatise, “is first and foremost the dark entity of the house, the one that partakes of subterranean forces. When we dream there, we are in harmony with the irrationality of the depths.”

Imagine what Bachelard might say we dream of when we dream in our self-storage lockers, the rectangular, padlocked, infinitely uniform spaces where we are increasingly stowing our things.

Self-storage is booming in Canada. Americans enjoy more self-storage space per capita than anybody—nine sq. feet—whereas Canadians lag at two. In that great discrepancy, the domestic industry senses room for growth.

Industry insiders are monitoring the development of almost three dozen new sites in and around Toronto. “That’s just over two million sq. feet of new storage,” says Dave Allan, business development manager at Aurora, Ont.-based Apple Self Storage, which has 30 sites in Ontario, New Brunswick and Nova Scotia. Apple has opened 400,000 sq. feet in southern Ontario in the past five months.

READ MORE: Canadians are living beyond their means

Now Ottawa-based Dymon Storage, making its first move on the Toronto market, is placing its own massive bet, developing what it says will be the largest storage facility in the world, in the west Toronto district of Etobicoke, across the street from an Ikea.

Steve Creighton, senior vice-president of Dymon Group of Companies, says the facility, the first phase of which is slated to open this year, will eventually occupy almost 500,000 sq. feet. Besides miles and miles of storage lockers of various sizes, all running along corridors named for nearby Etobicoke streets, it will feature a world-class wine-storage centre with an on-site sommelier, as well as sharp-looking lounge spaces for tasting parties—“a kind of country-club set-up,” Creighton says.

In that vein, the site will also offer an on-demand valet service, allowing clients to request that certain of their items—think Christmas or Halloween ornaments, or bicycles in spring and skis in winter—get delivered right to their doors, via Dymon truck, and later returned, an idea borrowed from similar premium services in Manhattan and Los Angeles. Creighton says he is even looking into how robotics might automate the system.

The massive facility will be housed in a hitherto derelict nine-acre warehouse once operated by Carlton Cards Ltd., and is to be sheathed in luxurious brushed steel and wood.

Dymon Storage located at 1554 Carling Ave. in Ottawa, Ont. (William P. McElligott/Dymon Storage)

Dymon Storage located at 1554 Carling Ave. in Ottawa, Ont. (William P. McElligott/Dymon Storage)

Dymon plans to build 80 sites in the GTA in the next decade—$1 billion worth of product unrolling across 12 million sq. feet. One of them, following a deal with RioCan Real Estate Investment Trust, will transform a former Target in Oshawa into a Dymon. That renovation, once completed, will have performed a neat trick: converting a space that once sold junk into one that, at a cost, will hold it for you in a humidity-controlled environment.

There are other national companies—StorageMart, Public Storage Canada, Access Self Storage and U-Haul—but Creighton believes Dymon offers something different. “The majority of our customers would never have rented from our competition,” he says.

Creighton claims Dymon, which launched in Ottawa in 2006, now controls almost 80 per cent of that city’s self-storage market, that it will soon control more than 90 per cent, and that in 10 years it will similarly dominate Toronto. “What we’ve proven is you can brand storage,” he says.

Stephen Creighton, senior VP, at a Dymon Storage facility in Ottawa June 7, 2017. (Photograph by Blair Gable)

Stephen Creighton, senior VP, at a Dymon Storage facility in Ottawa June 7, 2017. (Photograph by Blair Gable)

Others aren’t so sure. “In my estimation, it is more storage than the local area will be able to absorb in a reasonable time frame,” Troy McLellan, president and CEO of Public Storage Canada and head of the Canadian Self Storage Association, wrote Maclean’s in an email about the project.

Another industry observer stated this view more emphatically: “What Dymon is doing flies in the face of conventional storage economics!”

As it turns out, whether you think Dymon will dominate in Toronto in a decade or not ultimately depends on what you believe self-storage is really about. Is it raw, fungible space, capable of generating revenue in good times and bad? Or is it a lifestyle decision, festooned with incidental accoutrements, a creature of a bloated real estate market?

READ: How Canada completely lost its mind over real estate

It makes a poetic kind of sense that some of the earliest self-storage facilities in the world opened in L.A. under the Hollywood sign in the 1920s. There is a dream quality to the things placed in these vaults—an element of the time capsule, of arrested development, or of fantasy. Like the philosopher Bachelard’s basements and attics, they are holding cells for ephemera and places of intrigue.

One storage facility in Beverly Hills once housed the secret Pentagon Papers. John Maloof found, stuffed into two storage units in Chicago, the unknown masterpieces of the late photographer Vivian Maier.

Such facilities—relegated to city margins, under highways, deep inside industrial parks—represent the self-storage of old. Today’s facilities are high-tech, increasingly downtown phenomena: high towers of gleaming floors accessed via climate-controlled, drive-through loading bays.

It’s difficult to fathom the degree to which self-storage has changed. At storage centres in downtown Toronto, it is astonishing to witness how much work is being done in the lockers. A major area hospital is working in one unit as it ramps up a fundraising drive, cramming it with an army of envelope stuffers. On the same floor, another couple runs a restaurant-decor business. In a third unit, a small office is set up amid shelves of organic cotton sheets—inventory for an online business. (“It’s a little makeshift, but so is our business,” says an employee.) In yet another locker, a 19-year-old is assembling gift bags ahead of a conference.

The Apple storage and office suites on Third Line, in Oakville, ON. (Photograph by Cole Garside)

The Apple storage and office suites on Third Line, in Oakville, ON. (Photograph by Cole Garside)

New self-storage facilities now increasingly feel like condos for stuff: they pipe in music, provide WiFi, boardrooms and shredding services. Architects have done away with the sprawling, boxy, Ikea-style structures, designing pert, aesthetically pleasing multi-storey buildings that look better than many multi-unit dwellings. Companies have learned that appealing buildings can win over not just customers but municipal staffers responsible for green-lighting storage developments. Many cities have been skeptical of the industry, which they see as generating few jobs and little street life. In the U.S., San Francisco, New York and Miami have become alarmed by the proliferation of the facilities, and are moving aggressively to curb their spread.

READ: Have we hit ‘peak stuff?’ Ikea says there’s röom to grow.

Just as Dymon does, Apple Self Storage now accepts deliveries for its clients. At an Apple Self Storage facility in an old duvet factory at Toronto’s Adelaide and Bathurst intersection—“arguably one of the most urban facilities in Canada,” says Allan, Apple’s business development manager—70 per cent of the tenants are businesses. Contrary to what other insiders say, Allan maintains that condos aren’t prompting the industry’s growth: “The truth is, somebody who lives in 400 sq. feet only has 400 sq. feet of stuff,” he says.

Self-storage has up until now remained a staid business, in part because it has for so long remained so easy to make money doing it. It is a big, lucrative industry—worth $24 billion in the U.S. (Industry stats are scarce in Canada.) Last year, Raymond James, a financial advisory firm, touted StorageVault Canada Inc., this country’s only publicly traded self-storage concern, as a “first mover into a hot asset class” and a “strong buy” for 2017; the Financial Post, meanwhile, rated it “bulletproof”—an adjective that fits the industry as a whole for its ability to thrive at times of plenty and of privation.

Self-storage does well in recession, when foreclosures and other forms of dislocation flood the spaces with the flotsam of better days (consider the A&E reality TV program Storage Wars, a relic of the post-2008 era that helped popularize the industry).

And yet the fortunes of storage are inexorably (if mysteriously) linked to good times too. “We tend to follow the housing market,” says Cris Burnam, president of Columbia, Mo.-based StorageMart Partners, one of the largest operators in Canada. “When you see cranes pop up around the GTA, that means net new growth, more people, more people moving, churning, an overall mobility. That friction means you don’t always have a place for your stuff.”

Customers may be willing to shoulder the burden of another monthly bill during these periods of abundance: self-storage isn’t cheap. The most common size at Dymon’s Ottawa facilities is a 10-foot-by-10-foot storage unit, priced at $199 per month.

To justify the self-storage expansion, many industry insiders begin by citing urban growth, as well as the ascendancy of condo living, which discourages clutter, and higher rents. The raw figures tell the tale: net migration to Ontario, for example, has averaged 82,000 annually over the past decade, and reached 141,000 last year.

The Apple storage and office suites on Third Line, in Oakville, ON. (Photograph by Cole Garside)

The Apple storage and office suites on Third Line, in Oakville, ON. (Photograph by Cole Garside)

“Adding a hundred thousand people a year is partially responsible for driving the housing boom—and also the cemetery boom and the self-storage boom,” says Steven Scott, who—besides being chairman and CEO of StorageVault—sits on the board of Park Lawn Corporation, a publicly traded company that owns and operates cemeteries and funeral homes in Canada and the U.S., and whose stock has of late been a lively performer.

As demand grows, the struggle between operators—for customers and premium locations—is only getting more ruthless. “Before, it was, ‘If you build it they will come’—you didn’t have to be that sophisticated,” Burnam says. “Now the competition is far more fierce; you’re competing against folks who know how to advertise and provide phenomenal customer service. We live in a culture where microwave ovens are too slow.”

There are moments when Creighton, a gifted salesman who presents himself as an avuncular yet ardent self-storage evangelist, seems to be selling everything but storage. Dymon appears to view its newfangled virtual attics and basements as aspirational, even transformative.

Creighton claims that odours from furniture and clothing will disappear in Dymon Storage thanks to the company’s humidity controls, and that wooden drawers will begin to slide in and out of antique compartments smoothly, free of warp.

Dymon’s rivals look askance at its deviations from the self-storage script. Privately, they’ll tell you how storage operators are better off sticking to their knitting. They sniff at Dymon’s ancillary offerings—for example its file-storage system, which features an in-house app that lets clients scan documents in and out of shelf space.

The Apple Self Storage building on Adelaide street west in Toronto, ON. (Photograph by Cole Garside)

The Apple Self Storage building on Adelaide street west in Toronto, ON. (Photograph by Cole Garside)

In another strategy that puzzles rivals, Dymon provides clients with trucks and drivers (though not movers) free of charge. Creighton says that it’s women who make the vast majority of storage-related decisions—“the female baby boomer is our number-one customer!”—and that many such prospective clients see operating a truck, for example, as a challenge.

In the case of the massive Etobicoke development, it’s not the ancillary services that cause competitors to raise their eyebrows. It’s the site’s size. One industry player calculates that a 400,000-sq.-foot self-storage facility would need to rent an extra 16,000 sq. feet a month just to break even—not significantly less business than other self-storage sites do in an entire year. But Creighton says Dymon’s research shows a pent-up demand for all that space.

READ: Drowning in debt is the new normal in Canada

Creighton has a habit of dismissing rival storage players as antiquated “sheds in a field—single-storey, garage doors, chain-link fences, along the major 400-series highways in Toronto.” Dymon, Creighton says, as though repeating words heard in a dream, “is going to be much more than storage. We don’t want to be connected with our competition. We’re always fighting that stigma. In Toronto, we’re going to do things nobody’s ever seen before. We’re a disruptor.”

Either that, or Dymon has elevated what amounts to a glorified basement to the position of an aspirational product—too high and too teetering-on-the-edge precarious to any longer make much sense.

Meanwhile, that kid in the storage unit constructing bag after bag of swag for an upcoming conference has got the right idea: he has his earbuds in and is listening to tunes as he racks up his hours, inching ever nearer a goal of 9,000—15 gift bags an hour. He’s getting paid to be in storage.

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Self storage: Inside the new real estate war to stash your stuff

  1. If we have reached the point where we have to rent property for our ‘stuff’……..it’s time to become a minimalist society.

    • I agree. But on the flip side — there is a living to be made in providing this service.

      About 12 years ago some business partners and myself look into building a storage unit facility. We had zoning in place and we had a partner in a company that makes the physical units. Unfortunately a guy right across the street from where we were going to setup beat us to delivery. We believe it was through the zoning notifications that he got wind of our business plan. Anyways — we pulled out. Storage units are a very competitive and as this article points out — a much needed business.

      • Probably a trendy one though……likely won’t be around in 20 years.

  2. Your post is great. Self storage business is booming nowadays as more people are searching for a place to store their THINGS or we can say RV or Boat also. When we are building a self storage business we should also keep in mind about the environment. We can install solar panels for that, it will save electricity and money. Keep Sharing informative post.