Houston, the nation’s fourth-largest city with 2.3 million residents, would seem to offer an excellent opportunity for self-storage developers and owners. It is one of the most affordable housing markets in the nation. It has a growing, diverse population. More than 81,000 housing units are in various stages of planning and/or construction over the next three years.

Looking at greater Houston metro area data, however, and prospects for self-storage unit growth would appear to be limited, with only 7 square feet of storage space per resident – slightly less than the national average of 8 square feet per capita. The picture is only slightly brighter in the distant suburbs, 20 miles from the city center, where the average person has access to 6.3 square feet of storage space.

 Upon closer examination, however, a number of zip codes – including some in the city’s super-charged southwestern suburbs, as well as neighborhoods with strong potential for gentrification – appear to be underserved when it comes to self-storage facilities. 

First, a brief overview of Houston geography: The city lies on a flat plain, less than 50 miles from the Gulf of Mexico. The inner city is surrounded by Interstate 610, a 38-mile loop that was completed in 1976. Within five miles of the city center, there’s an average of 7 square feet of storage space per person. Another loop, the 88-mile-long Sam Houston Tollway, was completed in 2011 and runs about five miles from IH-610. Storage space is slightly less available there, with an average of 6 square feet per person. The road is in the process of being encircled by the Grand Parkway, a 180-mile road about 10 miles distant from the tollway that crosses through seven counties and will be the longest beltway in the U.S. when completed. 

Although the median household income in Houston is lower than the national median, the costs of living are considerably lower, and the city’s economy is diverse and offers a multitude of high-paying jobs for middle- and upper-income residents who primarily live in the city’s northern and western suburbs. The city is the world’s leading petrochemical manufacturing center, and more than three dozen foreign governments have trade and commercial offices in Houston. Although the city’s fortunes were built on the oil industry, it has diversified to include major financial, higher education, health care, and aerospace institutions.

In this newsletter, we’ll examine the potential for self-storage in three zip codes, located within each of the three concentric beltways around Houston. The zip codes were selected on the basis of a proprietary TractIQ opportunity score, based on factors that include population projections, housing construction activity, and available self-storage square footage per resident. It is important to note that conditions can change quite rapidly in Houston; it remains the only major city in the U.S. with no zoning laws.

Inner Loop, Zip Code 77009
Woodland Heights/Northside Village

Houston is bisected by two major interstates. Interstate 45 is one of the few interstates in the nation to be contained within a state, running 285 miles from Galveston north to Dallas. Interstate 10 is one of the longest in the nation, stretching 2,460 miles from Jacksonville, Fla., west to Los Angeles, Calif. The 77009 zip code is split by I-45 and includes the area between Houston’s central business district and IH-610. It is directly east of the neighborhood known as the Heights and north of downtown; both areas have seen explosive gentrification over the last decade.

The I-45 corridor has seldom been considered one of Houston’s more desirable neighborhoods. An examination of 2015-19 American Community Survey (ACS) data shows a number of factors within the zip code that indicate potential for self-storage growth: 

The median household income of $56,316 is higher than the city’s median of $52,338.

Almost 59 percent of homes in the zip code are occupied by owners; only 42 percent of the city’s housing units are owner-occupied.

The median value of housing units in the zip code — $281,200 — is more than $100,000 greater than the city’s median value of $171,800.

The vast majority of homes, 74 percent, in the zip are single-family detached; only 44 percent of the city’s housing units are single-family detached homes. More than 5 percent of housing units in the zip are studios with no bedrooms, compared to 3.3 percent across Houston.

Building permit records examined by TractIQ show there are at least 27 building projects to create 1,951 housing units in the planning and approval stage in the zip code. 

There are 19 self-storage facilities within a three-mile radius of the zip code, including three within the 77009 zip code. Currently, there are approximately 4 square feet of storage space per person in the zip, roughly half the national average.

Outer Loop, Zip Code 77064
Willowbrook/Jersey Village

The 77064 zip code is tucked into the northwest corner of the outer loop, split by the Sam Houston Tollway and approximately 15 miles from downtown Houston. By Houston standards, it’s a relatively older suburb with one of the biggest concentrations of Asian-Americans in the city.

The median household income for the area is significantly higher than the city ($52,338) and nationwide ($62,843) figures, with half of households earning more than $71,754 annually.

The percentage of homeowners in 77064 is almost the exact inverse of ownership rates for the entire city. The latest ACS data available show 57.8 percent of housing units in the zip code are occupied by owners; 57.7 percent of units in the city are occupied by renters. Nationwide, approximately 64 percent of housing units are owned.

Homes are slightly less expensive in the area than in the city, with a median housing unit value of $162,300 vs. the city’s median of $171,800. Nationwide, the median value of a home is $217,500.

Almost two-thirds of housing units in 77064 are single-family detached units, compared to 44 percent in the city. Nationwide, about 62 percent of housing units are single-family detached homes.

Building permit records show three projects adding 494 housing units in the zip in the near future. 

There are 18 self-storage facilities within a three-mile radius of the 77064 zip code, but only two within the zip itself. There are currently 2 feet of storage space per person in the area, far lower than the national average of 8 square feet. 

Outer-Outer Loop, Zip Code 77423
Brookshire

Brookshire, a city in Waller County, Texas, isn’t part of Houston – but you wouldn’t know it from a drive west on I-10 or FM 1093 after the end of the Westpark Tollway. Big-box stores and chain restaurants line both major arteries leading out of Houston, accommodating an exurb that’s one of the next logical steps for growth to the west and southwest of the Katy Prairie. The zip code’s population was roughly 6,900 in 2000, according to the Census Bureau; since then, it’s almost doubled, to 12,400.

The median household income of the 77423 zip code is $61,178, slightly less than the national median of $62,843 but $10,000 more than the median Houston household income.

The zip code has one of the highest penetrations of homeownership in the Houston metro area, with 81.4 percent of households occupied by owners – almost double the 42.3 percent rate in Houston and significantly more than the 64 percent homeownership figure for the U.S.

The 77423 median home value of $217,300 is only slightly less than the national median of $217,500, but far more than the Houston median of $171,800.

More than 68 percent of the zip code’s homes are single-family detached units, one-third again as much as the percentage in Houston and more than the 61.6 percent of single-family detached units in the United States.

Because the zip code is in a small (but growing) county, comprehensive building permit data aren’t available, although one commercial company that tracks new home availability found almost 180 recently built homes for sale in the zip code.

There is one self-storage facility in the 77423 zip code, giving the area an average of 3 square feet of storage space per resident – far below the national average of 8 square feet per person.

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Author: Frank Bass