Self-storage oligopoly
The two top US self-storage companies, Public Storage and Shurgard Storage Centers, have agreed to a deal. Public Storage will acquire Shurgard for $5 billion. The new company will have 2,100 storage sites in 39 states and 7 European countries.
The deal was worked out after several previous attempts had failed. The new company will make for a giant in the field. The two next biggest companies, U-Store-It Trust (339 locations) and Sovran Self Storage (254 locations) are minnows by comparison. There are lots of smaller, mom-and-pop operations, but like so many other retail services, this looks like one that is on the way to being dominated by big chains.
This industry, basically a set of real estate trusts, is growing at an amazing pace. It started only about 30 years ago and was mostly geared at retirees moving to smaller properties. Now it is a $145 billion industry, with American families storing all manner of junk in concrete storage units. According to a New York Times story ("A Nation of Pack Rats Needs Room to Stow", 4/2/06), it is now "a business large enough to provide nearly seven square feet of rentable space for every person in the United States.." The industry returns over 17% per year on equity. And the prospect of mergers and acquisitions has investors drooling.
In addition to the Public/Shurgard deal, General Electric sold off its Storage USA division to a combination of Prudential Real Estate Investors and Extra Space Storage in 2005, a $2.3 billion deal. U-Store-It Trust bought 146 locations from smaller operators for around $550 million.
And the self-storage idea is now spreading internationally. The UK has over 300 faculties, and France, Germany, they Netherlands, and other companies are growing fast. One motivator for the Public/Shurgard deal has to be Shurgard's already established international presence.
11:25:49 AM 
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