When looking at the industry’s top operators, other than the total ranking, there are several interesting bits of data that can be broken out. First and foremost, not all top operators solely own their facilities. Some include a combination of owned and third-party managed facilities, while others strictly operate as a management company with no ownership involved.
Tables 1 and 2 look at those self-storage companies that own facilities but do not third-party manage any facilities with data ranked by rentable square footage and facility count. Once again, this year Public Storage holds the top spot with 151 million rentable square feet of storage, followed by StorageMart and W.P. Carey, both of which have more than 13 million rentable square feet of storage space in their portfolios. While W.P. Carey maintained third place, StorageMart moved up to the second spot from number four last year.
World Class Capital
joins the list for the first time in the fourth spot, followed by All Storage
which maintained its fifth position, and Compass (Amsdell Companies) which also
held on to sixth. Morningstar, not on the list last year, came in at number
seven. And while Brundage held onto the eight spot on the list, Platinum
dropped from nine to 10 and Safeguard also dropped from seven last year to nine
Those companies that only manage facilities owned by others are depicted in Tables 3 and 4 by number of facilities and rentable square footage, respectively. This year only nine companies on the top 100 list did strictly third-party management. This is due in part to consolidation that occurred over the past 12 months.
TnT Self-Storage management tops
the list, while Storage Asset Management dropped from first to second. Argus
Professional Storage Management holds the third spot; StoragePro maintains
fourth; and Storage Investment Management, ranked eighth last year, pulled up
to fifth. Cox’s Armored Mini Storage moves up one spot to sixth, and Cutting
Edge took seventh. Donald Jones Consulting and RPM Storage management both
moved up one spot from their positions last year.
1 indicates the market share of the top 100 operators in various increments
based on this year’s total national number of facilities (41,879). When
calculating by number of facilities, the top 100 operators hold 24.17 percent
of the market share compared to 29.36 percent by rentable square footage.
The bottom line is that no matter
how you calculate it, at least 70 percent of the self-storage facilities in the
U.S. are owned by one-off or small owners. This, despite the general belief
that as self-storage evolves into a larger, more sophisticated model, industry
consolidation is inevitable with larger players continuing to absorb the
facilities of smaller owners.
The opposing view to this theory is that the industry is so fragmented with one- and two-store operators that storage consolidation may not resemble that of other industries, such as hospitality. Plus, single-store entrepreneurs may be building facilities faster than large operators can acquire them.
Is consolidation inevitable? In the eyes of most REIT executives
as well as other professionals, the answer is yes—either financially through
acquisitions or operationally through third-party management services. For some
small owners who cannot complete with the REITs in terms of online rentals and
other economies of scale, aligning with a REIT via third-party management may
certainly be a viable option.
To have true consolidation, the largest operators should
continuously be acquiring facilities faster than can be added to the total mix,
but the numbers indicate that hasn’t happened historically in self-storage.
Industry data indicate the ratio of public-to-private ownership has not changed
much in the past 20 years. According to statistics provided by New York REIT
Sovran Self Storage, public REITs controlled about 11 percent of the 25,000
storage facilities in the U.S. in the 1990s. With the number of facilities
growing to more than 53,000—nearly 42,000 of which we report on in the 2017 Self-Storage Almanac—the ratio of
REIT ownership has only increased to 17 percent as seen in Chart 2.
One theory for this is that most of the development comes from the
entrepreneur side, not the REITs. While the REITs are more than willing to buy
a facility that a smaller operator has built and leased up, for the most part,
they are not major developers. And, since the top operators can’t buy enough
facilities to keep pace with the industry’s growth, their percentage of
ownership will drop while the total number of facilities they own will continue
More detailed information about industry ownership can be
found in the 2017 Self-Storage Almanac.