A study of self-storage and things we won’t let go
Photos by Allison Bohl Dehart
When the sign went up announcing a new CubeSmart self-storage facility at the outskirts of River Ranch, Lafayette’s brief foray into good city planning looked dead. The four-story girders of the structure now hold a skin of mason work and dark glass, resembling a mid-priced hotel in urbanist chic, obscuring a warehouse of 700 aluminum lockers.
Holding down one corner of a high-trafficked intersection, with a gas station, a car wash and a CVS on the others, Lafayette’s most curious new self-storage monoplex, completed in 2016, is not just a monument to prodigious American stuff-gathering; it’s among the best-looking buildings on Johnston Street.
In 2015, Baton Rouge-based developer Craig Smith began investing approximately $15 million in new self-storage in the city of Lafayette, spread among three 100,000-square-foot facilities — on Verot School Road and N.E. Evangeline Thruway, in addition to the Johnston Street location.
Those three structures cap his local fleet at six, expanding on a mostly Baton Rouge operation that just recently took on the CubeSmart moniker from Smith’s homemade brand, The Storage Center. Smith is the landowner for some 20 facilities throughout Louisiana and Texas, with CubeSmart providing the facilities management, brand name and efficiencies of scale and technology.
All told, CubeSmart, a Pennsylvania company driven by the voracious appetite of a real estate investment trust, has grown in its 13 years to command a spot among the nation’s top four self-storage operations, holding American things in more than 800 facilities across the country. Managing Smith’s properties is a sliver of the company’s robust portfolio.
Smith’s peers share a healthy skepticism about the viability of his Johnston Street location, though most who know him are deferential to his intelligence. By all accounts he’s a smart man, and a nice guy who loves to talk storage and is bullish about Lafayette’s prospects as a self-storage town. Smith declined to be interviewed for this story.
According to vets of the local storage industry, the Lafayette area’s market is beyond overbuilt. Jack Paul Showers, a local early adopter in a self-storage industry that’s since eclipsed the combined ubiquity of McDonald’s and Starbucks, both nationally and locally, says that in the 20 years he’s kept tabs on the Lafayette market, the amount of storage space in the city has ballooned 10-fold, from 400,000 square feet in 1997 to more than 4 million square feet today.
That the city of Lafayette — after two years in a downward economic spiral that’s spun some 20,000 jobs into the void — could sustain any sort of growth would seem odd.
But self-storage provides a kind of stability, particularly in a town thrown about by the volatility of the oil industry. They’re holding places for people in painful transitions. The industry grows because we don’t let go.
“I kinda feel like Lafayette is the best oilfield town around. Who wants to move to Odessa? Who wants to move to Hobbs, New Mexico? There’s a lot of crappy oilfield towns,” laughs Jesse Thomas, 31, formerly of New Iberia.
In October 2015, Thomas was laid off for the second time in his 10-year career in the oil service industry, a crushing and terrifying experience for a prideful sole earner of a young family of three. After almost a year of looking for work fruitlessly, he gave up on Lafayette and sent his wife and daughter, a toddler, to live with family in Jacksonville, Fla. He stayed back in New Iberia to pack up their dream home and ready it for sale. He finally left Acadiana, likely for good, to join them in October of last year.
That home has yet to sell. It’s an odd bird of a house, to be sure, but it made the perfect setting for his family’s eclectic interests and boundless creativity — his wife’s needlework, paintings by wildlife artist C. Ford Riley, colorful Japanese pottery he bought at a shop near Parc Sans Souci and his hand-built computer. By his description, for two years, their life was idyllic in that place. Now it’s a memory that, thankfully, can go with them everywhere.
Save for the computer and some kitchen essentials, those totems of the good life paid for by Thomas’ work offshore — the pots, the paintings, and his passport — were all in a 10-by-30 storage locker, packed to the gills in Carencro. That particular bay of lockers is part of a new expansion to a long-standing Life Storage/Uncle Bob’s facility.
“It feels like oil is one of the last industries in America where a working guy can make a really good income,” Thomas says. “It’s maligned, but we get that it’s necessary. It’s a strange relationship with the public. In Florida people don’t understand that.”
In March, Thomas returned to fetch his things, ready to commit to whatever life brings in Jacksonville. His wife has found a job as an accountant, which will keep them afloat, but he hates that she has to work. He gabs with the moving crew he hired to move the summary of his possessions into a 26-foot truck, bound back for Jacksonville and a two-bedroom apartment.
He mulls putting what doesn’t fit into storage once he gets there.
For a time, self-storage was a mocked industry, regarded as low-rent real estate akin to mobile homes. The industry has been under some attack by way of restrictive zoning, enacted in some communities to resist self-storage’s steady urban invasion. Facilities often take up massive plots of land with essentially dead space. In states like Louisiana, they pay no sales tax. Like apartment complexes, their massive lot sizes with large buildings produce significant property taxes to local governments. But unlike apartment complexes, they don’t anchor economic activity.
The industry is complicated, to be sure. It’s divided into sub-sectors with different kinds of facilities and different kinds of operators that don’t really bear comparison.
Climate-controlled, premium facilities like CubeSmart’s are on the rise, outpacing the more basic hotboxes that came before them. In some markets, commercial storage is king. In others, it’s big toy storage, space reserved for folks who own RVs and boats. Some operators take immense pride in their companies, spending great time and expense to keep their facilities clean and secure and their customers satisfied. Others take it on as mailbox money, keeping costs down with skeletal infrastructure and providing practically no customer care.
Like in any other marketplace, there’s a tension between the locals and the big companies, pitting intimate customer service against efficiencies of scale. Despite the large capital investments, many small-time, family operators turn to the industry because it’s a reliable source of income, with relatively little operating overhead.
Scott Harris, 58, spent 20 years in the tech industry, moving around from Texas to California as a manager in companies like Compaq, Intel and Hewlett-Packard.
“I’ve gone through good times and bad times in technology companies, and you see layoffs left and right,” he says. “I survived two or three layoffs. And then eventually you get it.”
He turned to the self-storage industry on a nod from his in-laws, who operate self-storage facilities in Baton Rouge. The draw for Harris was the steady income and the lack of stress, when compared with the rough and tumble of the big tech world. He took his time to identify a property cheap enough to make a self-storage operation work. In 2010, he bought a piece of the old Union Pacific railroad site along the Evangeline Thruway and sunk $750,000 into rehabbing it.
Even years into the local ascent of the industry, banks laughed him out the door, forcing him to finance his project on a private loan from family. It took him two years from construction to pay it back. And now, he says, his bank is clamoring for him to build more of them. Echoing the sentiments of his colleagues, he’s thus far demurred, fearing the market is too overbuilt. He nonetheless marvels at Smith’s Verot School Road operation, which he believes will sing for years to come: It’s in a rapidly growing part of town and on the “going home” side of the road.
Harris’ operation doesn’t so much compete with businesses like CubeSmart and Life Storage. He rents out about 100 of the conventional climate-controlled lockers, but for the most part he makes his money leasing large outdoor spaces for folks to park RVs and boats. Big toy storage has driven some new development in self-storage in Youngsville, for instance, where homeowner agreements in compact neighborhoods prohibit residents from parking big vehicles on the streets or in their driveways.
Taking stock of the economic situation around him, his move from the tech world to the world of self-storage, Harris defends the industry. “It’s a good industry. A small guy like me can exist and put food on the table,” he says. “These people have their toys and they have to have a place to store it. I feel like we’re doing a service in the community.”
In any event, Harris insists, self-storage is a much more resilient industry than tech or oil.
In the last 10 years, while the rest of the country limped its way out of a cataclysmic mortgage crisis, the city of Lafayette rode a petroleum bubble pursed with oil prices above $100 a barrel toward the stratosphere. In that time frame, at least 15 new self-storage facilities were built in the city and unincorporated portions of Lafayette Parish, roughly doubling the market. Even if Jack Paul Showers’ informal market analyses are imprecise, his basic take is right on the money: Self-storage in Acadiana, mirroring national trends, has exploded over the last two decades.
With income tax incentives for commercial construction greasing the wheels for expansion and plenty of cheap money available, a construction flurry like Smith’s CubeSmart expansion could reflect beneficial timing or an escape from a looming tax liability. The moves would certainly appear prescient now that the Federal Reserve has bumped interests rates again from once market-defibrillating lows.
But tax incentives and low interest rates only make it easier for operators to get to an end point: a supply of end users. By that count, the Johnston Street CubeSmart operation seems to be doing fine, showing a 62 percent occupancy in March of this year.
Analysts suggest that self-storage is recession resistant, and that’s particularly true for the national companies like CubeSmart. That’s not to say the industry is parasitic. Indeed, it has performed well over the past two decades, no doubt weathering storms that have toppled more conventional American real estate sectors.
It’s difficult to ignore the at least correlative connection between the industry and crisis, on scales national, local and personal. Showers sold most of his Storage Max fiefdom, four of his then five facilities, to Uncle Bob’s/Life Storage in 2006 for $9 million, a transaction that doubled the number of then-Uncle Bob’s in the market. Uncle Bob’s acquisition team was in pursuit of Gulf Coast self-storage properties within 500 miles of New Orleans, following regional population swells from Katrina evacuees. (Until merging with and then re-branding as Life Storage, Uncle Bob’s was the DBA for Sovran Self Storage Ltd.)
According to the acquisition agent who brokered the sale, Jonathan Attea, Sovran’s portfolio was located predominantly in the Southeast during the mid aughts. Beyond the temporary population surge from Katrina, Lafayette had “good market fundamentals,” he says. The Storage Max fleet had prime locations with high population density, and Showers’ buildings were of strong build quality. More important, Attea says, they knew they could improve management operations with streamlined efficiency.
Big operations like Life Storage and CubeSmart can reportedly turn a profit at 30 percent occupancy, but they nevertheless need a reliable base. They attract new customers with a honey pot of discounted rates, particularly around the opening of stores. Due mostly to efficiencies of scale and technology, the big guys penetrate fractured markets made up of small-time operations and wait their competitors out. If they oversupply the market, fine.
The dawn of the mortgage crisis began an impressive run of returns for investors in operations like CubeSmart. Between 2008 and 2015, stock portfolios in the self-storage trade produced gangbuster returns, year after year, making it one of the safest and most profitable real estate bets around. Those returns, over the past two decades, have fueled seemingly insatiable expansion into a fractured American marketplace that puts up no competitive resistance.
Discounted storage may get customers through the door, but the long game is in incremental rent hikes on a functionally captive consumer. Life Storage operates proprietary software that adjusts the price of rentals according to demand, a managerial efficiency that maximizes facility profits. For longtime customers, those storing outdated clothing and furniture for instance, each 5 or 10 even 25 percent increase is a bearable price to forget unwanted things.
That pricing scheme, promoted aggressively in new markets, caught the attention of Louisiana State Sen. Regina Barrow of Baton Rouge. Barrow has been a CubeSmart customer for years, first renting before Smith swapped out his Storage Center brand. In her time as a renter, she saw her rents go up routinely and heard matching complaints about similar experiences from her constituents. Barrow herself says she now pays $200 per month for her unit.
Via Senate resolution, she proposed investigating ways to regulate the industry during the 2016 regular legislative session. Then the historic August rains came and flooded 90 percent of her district, sending them packing up self-storage units for miles around. Barrow got justifiably distracted. But her concern has remained, heightened even, now that she sees so many of her constituents in a particularly vulnerable situation.
Whether the industry is preying on flood and hurricane victims or providing a key service in a time of need depends on your level of cynicism about capitalism in general. The objective fact here is that the root cause of demand — human nature — means profits can be turned in bad times as well as the good. Better yet when, between ebbs and flows, the market still buys lots of things.
Stacked to the 20-foot ceiling of Michael Gibilterra’s locker are boxes of what amount to the non-essentials of a well-traveled man, pent up while he awaits the possibility of a move for a new job. Most of this stuff was stashed here after he got laid off from the first of two jobs he’d lose in 10 years in the oil industry, a familiar story for people in his line of work. He’s landed a few gigs here and there, collecting paychecks to support a modest lifestyle secured well within his month-to-month means.
Somewhere in the locker are a bag of popcorn and a bag of mud he collected at Woodstock ’94. There’s no telling where that memorabilia is in the hastily arranged pile of boxes, labeled as they are with scrawled-on Sharpie. Maybe two of the 40-some-odd boxes contain items of any real value, sentimental or otherwise. A pleather couch and a boxy flat screen TV are among the now-outdated furnishings of his previous home near the Acadiana Mall, which he sold not long after receiving his last pink slip four years ago, moving into a mother-in-law suite he rents in Carencro. Oil and gas downsized him. He downsized his home.
Gibilterra admits that he’s somewhat trapped. Even if he wanted to sell off the items in his locker, very little of it has much monetary value. Childhood tokens and Pearl Jam tickets have meaning to him alone.
Like Jesse Thomas, his skill set is limited to what he learned in the oil business. A nurse by education, his license lapsed years ago, and he’s reluctant to return to the field after decades away. In his 40s, single, his circumstances are not ideal, but they’re manageable. Provided he gets a new job, it could very well be in another state in an apartment that won’t fit his things.
While he decides, Gibilterra keeps paying the $200 monthly rent. Fortunately, the mom-and-pop operation he leases from hasn’t raised the rents on him over the interim, a tactic distinguished from the aforementioned discount-then-hike maneuver of the bigger players. But the need to fit stuff in potentially smaller boxes underscores a key driver in the industry’s demographic dynamics — home downsizing.
Gibilterra’s predicament is the result of offshore volatility. But for the most part the trend is driven by millennials and baby boomers choosing to live in smaller and smaller homes and apartments. New homes built in Lafayette in the last couple of years are 20 percent smaller than homes built in previous decades, and the typical lot size has shrunk 30 percent to less than a quarter acre.
America’s largest living generation, the boomers, are a looming avalanche of accumulated goods, due to the coincidence of their upbringing with the dawn of post-war consumerism. They were reared on consumer goods, purchased by their parents in the Greatest Generation, who, in passing, bequeathed to them the totality of a life spent buying. That generational passing of stockpiles to families in smaller spaces has, to some observers, been the primary driver of demand for the nation’s self-storage, as best as anyone can point to a single cause.
Stock analysts paint a rosy picture of the future of self-storage for the next few decades, sourcing their optimism in a convergence of possession-laden boomers and their wanderlusting children, more and more on the move to urban centers and away from the American dream of a two-car garage and a half-acre of land.
Locally, we can see that trend playing out. More than 23 percent of people in Lafayette Parish are over 55 years old, and the retirement bomb is ticking. Younger locals have shown a preference for living inside city limits, shrugging off the suburbs, if to a smaller degree than observed in bigger millennial-magnets like New York, New Orleans or Austin.
People are buying smaller homes across the board and sorting out their remaining excesses, what to keep at home and what to store. For millennials, that demonstrates a generational shift in values, treasuring travel and experience over treasure itself. For boomers, that reflects the proximity of death.
Captivated by repeating shapes he observed in the natural world, sculptor Robert Wiggs, an artist and professor by trade with no formal education in theoretical mathematics, derived a geometric system for generating multitudes of polyhedra. Robert’s twisting and bending of shapes led to the discovery of an all space-filling polyhedron, only the ninth such discovery since the days when Pythagoras fathered geometry. Like the Greek thinkers before him, Robert was a multifaceted and endlessly curious mind. An artist not restricted to aesthetic comment or personal expression, his work probes nature for the essential stuff of the universe.
Despite the rarity of his discovery, Robert has not received much recognition, either in the world of academics or the arts. In his time, he lectured on the same collegiate circuit as Mark Rothko, but was a minor player in the academic arts scene.
For a retrospective in 2013, his sons, who as kids assisted Robert with his projects, created a 30-foot-long scroll depicting the genesis of the system.
Two and a half years ago, Robert’s youngest son, Calvin Wiggs, 57, packed that scroll, along with the rest his father’s legacy, into a locker in Broussard and moved Robert into a nursing home. Calvin and his brother worked to ready the family home for rent; they moved the bulk of their father’s work into a 4-by-10 climate-controlled storage unit. Robert died in 2015 at the age of 93, his health rapidly deteriorating after the death of his wife, who exerted a grounding force on Robert’s polymath eccentricities.
Robert left no formal will, and in his life eschewed selling his pieces, which he, like his geometric system, created in multitudes. He produced significant commissioned work that’s still visible today, most notably the Twisted Loop that sits under an oak tree on a jutting triangular island outside the Downtown public library. Though his public work is the most visible part of his legacy, Robert left behind scores of stone and wood carvings, collages, drawings, paintings and sculptures made of copper wire.
During the August flood, Calvin and his brother got automatic warnings that the unit may have flooded. Many of the hundreds of units at the Life Storage facility Calvin rents from took on water. His did not.
Less than a decade from retiring, Calvin plans to spend his post-working years promoting his father’s work. That process is beginning now, with negotiations ongoing to put the collection in permanent residence at the Paul and Lulu Hilliard University Art Museum. Calvin and his brother have taken as much as they can, but they can’t keep everything.
“It would feel better to have it all in one place,” Calvin says. “So that, if it’s all there, we know where it is.”
While they shop his collection around, in search of a place that can hold the physically small but intellectually immense markings of a curious mind, the legacy of a man obsessed with the generative complexity of the natural form is locked in a box.
In March, Craig Smith’s third new CubeSmart, the one on Verot School Road, opened. With a generative geometry, self-storage, mankind closes on filling all space.