Organizing whiz Marie Kondo’s Netflix show may have people across the country looking to get rid of stuff that fails to “spark joy” in their lives, but don’t expect that craze to impact the clutter of self-storage facilities around Denver.
With a strong economy and a population that continues to boom, self-storage providers see plenty of opportunities to house more stuff for more people in the Mile High metro, and dozens more facilities are already in the pipeline.
Thirty-seven self-storage facilities opened in the 10-county Denver metro area in 2018, bringing the total operating today to 339, according to data and analytics firm STR. That count doesn’t even include Boulder County.
On a square footage basis, that proliferation will slow down by as much as two-thirds in 2019, analysts project. Still, STR is tracking eight more facilities already under construction in the Denver-Aurora-Lakewood statistical area, 12 that are expanding, and 27 more in various stages of planning. Denver is not alone — commercial real estate data firm Yardi Matrix is tracking more than 2,000 self-storage projects nationwide — but its recent growth spurt has been noticeable.
“We saw Denver have the largest supply increase of any market we were tracking” last year, STR executive vice president Anne Hawkins said. The amount of rentable square feet on the market jumped 23 percent. “Some of the demographics that developers look at are household formations, population growth, job growth, household income. Denver’s economy has done very well.”
With the industry’s expansion has come consternation from neighbors and government regulation. Three metro area cities, Arvada, Parker and Denver itself, adjusted their municipal codes over the last three years to clamp down on where self-storage facilities can be built.
In the case of Parker, the Town Council decided banned new facilities outright in 2016. One opened last year because it was already in the development pipeline. In a twist owed to the town’s odd borders, one of the largest self-storage centers to open in the area recently, a Public Storage space near the prominent intersection of Lincoln Avenue and Jordan Road, could not have been prevented by town action. It’s in unincorporated Douglas County.
Members of a Parker-focused Facebook group debated the merits of all of the self-storage space in the area last week in response to a Denver Post inquiry. There are now six self-storage centers in Parker and many others nearby. Some people couldn’t fathom the need for such spaces, and wondered why people don’t just get rid of things they pay to keep in storage. Others say they have used the facilities during moves or unexpected situations where they had to keep extra things somewhere for a while. Some pointed out the business model must be working if developers keep building them.
Katie Adensam, 24, grew up in the Parker area and bought a house there in 2017 where she lives with her husband and two children. She said she can count three or four self-storage facilities that have opened near her home in just the few years. Like many in the Facebook group, the new Public Storage facility is her least favorite.
“I think it bothers me because it’s so huge. I used to enjoy seeing some of the sunset out that direction and now it’s blocked by Public Storage,” Adensam wrote in a Facebook message. Andensam’s husband did rent a storage unit when he was deployed as part of the U.S. Army, she said, but she personally would “rather get rid of things as soon as possible before paying for that service.”
Denver’s adjustment was more targeted than its south metro cousin’s. The City Council last May unanimously approved a package of zoning changes that included a ban on new “mini-storage” facilities within a quarter of a mile of light rail stops unless those stops are already in industrial areas. At least 18 self-storage centers were either built or remodeled in Denver between 2014-18, city records show. Many of them rose in prominent, high-traffic spots, such as the seven-story Public Storage facility visible from the stands at Coors Field. That prominence has helped draw jeers from residents and elected officials alike.
“A storage facility is the least human-oriented land use I can think of,” Councilwoman Kendra Black said. “The nature of it is it’s for stuff, not for people. It’s just a terrible use of land near a light rail station.”
Black, whose southeast Denver district includes a good number of self-storage facilities, is still upset a Greenbox Self Storage is planned for the site of the old Rockies Inn at Interstate 25 and Evans Avenue. Plans for that three-story project have been on file with the city since 2015, before the light rail stop rule change. Work is expected to begin in June.
“That would have been a great place for an affordable-housing building, you know?” Black said.
Greenbox is unique among the self-storage players in the Denver market. It’s homegrown, launched in 2012 by local businessman Bahman Shafa. The opening of its first facility, a 65,000-square-foot, 747-unit building at 3310 Brighton Blvd., unofficially kicked off the self-storage build craze in the city. Its centers are all enclosed, multiple-story buildings with climate control and sustainable materials, company officials say.
Greenbox focuses on urban areas filled with apartment dwellers, eschewing the multi-building campuses with drive-up access and roll-up doors many people think of when they envision self-storage centers.
“We think that for a dense, urban environment to work you really need storage,” Josh Fine, executive vice president of Greenbox parent company Focus Property Group, said.
Fine points to shrinking apartment sizes as a driver, particularly in Denver when many people enjoy skiing, mountain biking and other outdoor activities that require gear. The average size of an apartment in metro Denver shrunk by 6 percent in 2016-2018 compared to 2006-2008, according to Apartment Insights LCC and the Apartment Association of Metro Denver, further cranking up the demand for extra space. With a downtown population that has tripled since the 2000 to now sit around 23,000 people with more growth on the way, Greenbox and other companies see more market opportunity ahead.
“You need to have somewhere convenient and accessible, a place to hold the things that don’t need to go in your apartment every day,” Fine said.
Fine said there are benefits to self-storage as an urban-land use. They don’t require large parking lots. They don’t generate nearly as many daily visits as other retail uses. But they don’t have to be dead zones, either. Greenbox, like other self-storage companies building in urban areas, has ground-floor retail space in its Brighton Boulevard facility. It’s occupied by a cellphone repair business. A liquor store just opened inside an Extra Space Storage facility on Park Avenue in Denver.
Extra Space has been active in the Denver area recently with a number of new facilities and retrofits, including one built into the former Denver Public Schools headquarters at 900 Grant St. It has 35 locations in the metro area and eight in Colorado Springs, according to its website.
Extra Space officials did not respond to requests for comment for this story, but its most recent investor report sheds light on its overall financial health. Across 783 stores it has operated continuously since the beginning of 2017, Extra Space facilities were 93.9 percent occupied on a square foot basis over the first nine months of 2018. Same-store rental revenue rose 4.2 percent in 2018 compared to the first nine months of 2017 to hit $715.9 million. Same-store expenses rose 4.9 percent to hit $198.2 million, resulting in a net operating income of $517.7 million. Extra Space’s stock was worth $92.13 per share as of Wednesday night, up more than 100 percent over its value five years ago.
There is evidence the Denver market has too much storage and it’s beginning to show in rental rates. A recent report from Yardi Matrix found the average rent for a non-climate-controlled, 10-foot-by-10-foot storage unit in Denver was $123 per month in November, down 7 percent from the previous year. Rents fell nationwide last year but Denver outpaced the national decrease of 4 percent.
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Walter Brauer is a vice president with real estate services firm CBRE specializing in self-storage. Colorado as a whole is overbuilt on storage, he said. The state is home to about 9.14 square feet of self-storage space per resident. That’s almost 30 percent higher than the national rate of 7.06 square feet per person, considered to be a healthy ratio.
Brauer and the analysts at STR don’t see it as a problem though. Both note new centers can take as long as three to four years to lease up once built. With 80,000 people moving to Colorado last year, the market is still a desirable one.
“About 11 percent of the population uses self-storage,” Brauer said. “Long term, I think Denver is going to be a very strong market.”
