08 Jun Demand for Self Storage Grows in Houston Despite Poor Oil Market
By Alex Hassel, Storage.com
Despite plummeting oil prices in a city where the energy source is an economic force, people continued to flock to Houston more than any other U.S. city in 2015. According to U-Haul, for the seventh year in a row, Houston ranked as the most popular drop-off location for one-way truck rentals.
Houston has seen steady growth in recent years. The U.S. Census Bureau reported that Houston’s population count went from just over 2 million in 2010 to 2.2 million in 2015. According to the Houston Business Journal (HBJ), fracking was largely responsible for the increase, bringing 500,000 jobs to the region. However, momentum slowed in 2015 when oil prices fell, and the energy sector was forced to cut more than 4,000 jobs in the Houston market.
Patrick Jankowski, Senior Vice President of Research for the Greater Houston Partnership, told HBJ that the oil downturn wouldn’t cause Houston’s economy to collapse. At Transwestern Houston’s Trendlines event in November 2015, Jankowski said the Port of Houston, the city’s airports, and the Texas Medical Center were strong enough to keep the city afloat.
“Houston isn’t going to disappear in this downturn,” Jankowski said at the event. “The economy won’t collapse, but some sections will be hurt, some severely.”
Still, even though economic concerns developed throughout 2015, U-Haul’s report shows that the population kept growing. Houston realtor Paul Silverman says that’s what he experienced in the housing market as well.
“From 2013 to mid-2015, it was so busy, it was crazy,” Silverman explains. “It was when the oil prices started going down that the craziness started going away. Properties were still getting multiple offers, and it was really busy, but fortunately when the oil drop hit, the housing market was so high to begin with that it could absorb the blow. Now, it’s just a good market and not on fire.”
Silverman says there’s no particular place where newcomers are settling down in Houston, but he believes it depends on where they get jobs. In terms of whether new residents buy or rent homes when they arrive, he says it’s a good mix.
Developers seem to be working hard to keep up with growing demand for housing, too. A report from Forbes listed Houston as the third best city addressing the U.S. housing shortage. The city gave out 189,634 building permits for homes between 2011 and 2014, which was the most in the nation over that time.
The population growth has trickled down to the self storage industry as well. Jeremy Mejia, a storage consultant with Sentry Self Storage at 707 Maxey Rd. in Houston, says many of the people moving to the city have been coming to his property. His facility is at 80% occupancy, although he says that’s low due to some changes in management, but adds that most other facilities are more than 90% full.
“It’s been booming here for the past three years,” he says. “We especially see a lot of people moving during the summer season. We see a lot of people from California and the East Coast, and a few days ago, we even had a mover from New York.”
Tim Cohan, a manager at Voss Rd Storage at 15492 Voss Rd. in nearby Sugarland, says he’s seeing a different kind of benefit at his facility. The demand for new housing in Houston has brought contractors and other businesses who need storage to the area.
“My occupancy stays high here,” Cohan explains. “I’ve been running this facility for three years, and I generally average around 95% to 98%. A lot of my clientele is business owners, construction contractors, landscapers, pressure washers, and people like that. They’re looking for a place to keep their materials and equipment. We do get some people moving, but it’s mostly the contractors and such as a result of the homes going up.”
To keep up with the increasing demand, both companies are adding new storage space to the region.
“We know our competitors are selling out on smaller units,” Mejia says. “With Sentry, we’re expanding in Houston. We have over seven properties and counting.”
“We’re adding another building at this facility,” says Cohan. “Our current facility is 77,000 square feet, and we’ll be adding 15,000. We also just bought another piece of property, and the architects are working on plans for a 100,000 square foot facility.”
It’s unclear exactly what could be in Houston’s future. At the Transwestern Houston’s Trendlines event, Jankowski predicted that the oil market had reached the middle of the downturn. He also thought, at the time, that the drop could last for another 12 to 18 months. In January 2016, HBJ reported that it’s unknown how the poor oil market could affect the Houston’s population moving forward.