Storage may not be a flashy industry, or one whose impact on the economy is as immediately understandable as it is for restaurants or hotels, but it is a large one. The industry was projected to make $37 billion in revenue for 2019, according to industry blog Sparefoot.
In April, things were looking rough. The beginning of lockdown for COVID-19 meant things like moves and the need for businesses to store items elsewhere were going down across the entire country and bringing storage unit prices down alongside them. First quarter earnings reports from some of the largest self-storage companies in the U.S., like Public Storage ($PSA), stoked fears that the crawl back to normalcy for storage might mirror that of travel.
But the crawl may not have been as bad as it seems. While recent earnings reports for other major self-storage companies were still below last year’s results, they showed that the return to business as usual may not be as gruelling as they initially thought.
Prices for Cubesmart ($CUBE) storage especially shows signs that things may be returning to normal for the industry. The average price per unit for small, medium and large storage units dipped as low as -16% in the first week of April, shortly after lockdown went into effect across the country. But recently, average prices are now slightly higher than their pre-shutdown rates: 6% for Large and Medium units and 10% for small units.
As restrictions across the country lift and life slowly returns to normal - for better or worse - the need for storage space returns as well. Small businesses need space to store their goods, and people moving into college dorms or joining in the temporary flight out of urban centers need extra space during the transition. Cubesmart seems to have capitalized on the latter, completing two acquisitions for a total of $65.7 million that won them space in Maryland and New Jersey, as well as opening a New York facility after heavy investment, according to Inside Self Storage.
Cubesmart’s earnings report exceeded expectations, and the return to normal pricing seems to signal that demand is returning, there was also clearly an effort to make the numbers look as nice as possible. In an August 7 earnings call, CEO Christopher Marr and CFO Timothy Martin placed special emphasis on the effort to wrangle in delinquent accounts.
While Cubesmart’s regular storage prices have somewhat recovered, its parking units are on the decline. Over the last 6 months the average price for a parking unit has increased by about 5%, but in the last three months it has steadily slipped to -3%. This could be caused by the temporary exodus from cities. Now that people are leaving urban centers where parking can be a hassle to suburbs where many homes have garages, the need to pay an extra rent to store your car is unnecessary. Either way, the decrease is more than made up for by the recovery of its regular unit prices, which are up nearly 20% since mid-May.