Storage business soft in Davis and Weber
Wednesday , August 13, 2014 - 12:56 PM
OGDEN -- Light floods into a cinder block room to the metallic echo of a door rolling open.
Inside, brown boxes hold treasures, sometimes only of value to the owner. A machine such as a bicycle or a lawn mower await the season to change to be put to use again.
Storage units are ubiquitous across the country and are used for different reasons. For that, some suggest that the industry may be ripe for investing. Although that may be the case in some parts of the state, the storage facility industry is soft in the Ogden area.
Dan Nixon, owner of Lock It Up Storage and member of the Utah Self Storage Association board of directors, said while it may be a good business to be in, investors should examine their options before opening up their own storage facility. Investors need to consider where and how to use their money wisely.
Nixon owns 10 locations along the Wasatch Front from North Ogden to Cottonwood Heights. He opened his first facility in Ogden at Ninth Street and Wall Avenue in 1994.
Nixon said, for the most part, there are four types of customers.
The first are transitional, mostly residential customers who need a storage facility while they move into a new home.
The second type : people who are consolidating, because of a marriage or other circumstances, such as having to move back in with their parents.
A newer and growing segment of the storage facility industry are businesses looking to store merchandise.
Alan Jones, owner of Stor-N-Lock, said these customers find it less expensive to rent a storage unit than to eat up expensive retail space.
“A lot of businesses are turning to self storage because it is a very convenient option compared to storage in a backroom,” Jones said. “It is very safe.”
A long-term group of customer is made up of people looking to use a storage unit as an extension of their home.
People will visit their storage units various times of year to trade their lawn mowers for Christmas lights or to stow and retrieve other items.
“These are people we have for years,” Nixon said.
This is more common in urban markets such as Salt Lake City, where customers will rent smaller units. In more rural locations, such as North Ogden, customers need bigger units to store boats and such.
“Even along the Wasatch Front, markets are very different,” Nixon said.
That difference is seen in the growth of the industry.
While his business continues to grow in Salt Lake County, he finds it soft in Weber and Davis County.
He believes that may be in part because the market is overbuilt and also because storage needs are different in this area.
Jeff Johnson, owner of Beehive Self-Storage in Ogden, said the biggest problem in this market is that 1,100 new units were built in the area at the start of the recession. Johnson said that dragged down the other storage businesses. As the market recovers, the industry is still trying to absorb those units.
People like Jones are lucky to have locations in the growing Salt Lake County area.
Jones owns 22 locations in four states. He started his first in Midvale in 1979 and opened up a location in Ogden four years later.
“We’ve been in business for 35 years,” Jones said. “It’s a good niche.”
Jones attributes his company’s growth to simple business practices.
“We pay attention to detail, we are very conservative in what we try to accomplish. We set very realistic goals and we are very hands-on with our on-site managers,” Jones said. “Nothing magical.”
While overall business is on the upswing, he said, Ogden is slower than other markets.
He said that’s just the nature of the business.
“Real estate cycles,” Jones said. “You’re up and you’re down; you’re up and you’re down.”
And in the end, that is what the storage facility business really is, just commercial real estate. Nixon said it is no different than owning an apartment complex or retail space.
With that in mind, Nixon has no plans for further expansion in Northern Utah, but he does in Salt Lake County.
For those considering putting their money into storage facilities, Nixon said perhaps it would be better to invest in a storage company’s stock than to try to build one from the ground up.
Even after 20 years, he is still paying off some of his properties.
But Nixon said he enjoys being in the storage facility business.
“It’s fun because you get to meet people that need help and we always have to meet that help,” Nixon said.
A lot of people are in crisis, Nixon said, and they need a truck or some other service and his company helps them get what they need.
“It’s just a fun business to be in because it’s a people business.”
Contact Jesus Lopez Jr. at 801-625-4239 or email@example.com. Follow him on Twitter at @jesuslopezSE and like him on Facebook at facebook.com/JesusLopezSE.
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