The demand for office space is plummeting. The demand for self-storage is on the rise. Amid these trends, one real estate startup is turning the former into the latter.
Launched during the pandemic, Stuf is a new kind of self-storage provider. Instead of building new warehouse-like buildings on the fringes of communities, Stuf is identifying underused spaces in cities—vacant offices, empty garages, dead storefronts—and slotting self-storage facilities inside them. Working directly with landlords, the company fills in empty spaces with largely automated storage infrastructure and shares the revenue. For some landlords, on-site self-storage is a marketable amenity, and a way to finally use that windowless basement or oddly sized closet.
Stuf was founded by Katharine Lau, who has worked in commercial real estate for years. In her most recent job, she led real estate at the coworking startup Industrious, which has focused on revamping offices and converting unconventional real estate like hotel rooms into coworking spaces. Through this work, Lau began to notice the amount of space within buildings that was sitting idle. “I toured so many of these buildings, and I was always so obsessed with the underutilized spaces—basements, garages, back of house storage areas, weird quirky closets,” she says. The amount of wasted space began to irk.
“There was tons of this space all around us, under our noses,” says Lau. Based on her own research, she estimates that vacant space in underused office buildings, retail locations, and multi-family apartment buildings adds up to about 100 million square feet nationwide. “Developers or owners would buy entire buildings but so much of it would be empty.”
The pandemic has only made this worse. According to a new office vacancy tracker from the real estate services company Avison Young, offices in North America are seeing an average occupancy rate that’s 70% less than what it was before the pandemic.
At the same time, demand for storage space is on the rise, a fact some connect to pandemic-related home decluttering, moving, and business closures. The self-storage business is expected to grow 8% in the first half of this decade. The monthly cost to rent storage units is up between 9% and 10% compared to a year ago. Globally, self-storage was a $78 billion business in 2019. By 2026, it’s expected to be worth $123 billion.
Stuf is trying to turn one industry’s problem into another’s solution. Stuf launched last December with $1.8 million in seed funding and enters a competitive market with large conventional players like Public Storage, as well as the peer-to-peer platform Neighbor, which is like Airbnb for storage. Stuf is specializing in underused urban real estate, and currently operates in nine locations in Los Angeles, San Francisco, Oakland, and New York, with plans to open locations in Chicago, Dallas, and Washington, D.C., later this year. The initial space was 1,500 square feet, but the company has begun taking over larger spaces in the 8,000- to 10,000-square-foot range.
One is a former restaurant space in Brooklyn that had seen a series of restaurants fail over the years. Stuf spent about three weeks converting the interior into rows of brightly lit steel storage. Outside, the mostly windowless brick facade has been painted over with a multicolor mural. Within five months of the site being open, Lau says the storage space is at 90% capacity.
Lau says Stuf is increasingly looking at expanding into vacant office space that’s been drained by the pandemic, as well as underutilized parts of buildings that have struggled to find purpose as demands have changed.
“The way office tenants used to use real estate 20, 30 years ago, they had mail rooms that were entirely staffed or document repositories. Now, because everything’s in the cloud, a lot of that space is unused,” Lau says.
The pandemic has increased the momentum, Lau says, with landlords becoming “a little bit more open minded” to finding new revenue streams in spaces that are no longer in demand, from vacant retail stores to ignored office-building basements.
For now, Lau says the company isn’t planning on supersizing the concept in something like an empty big box store, but is instead focusing on smaller footprint spaces that are closer to where potential customers work and live. She says the spaces Stuf focuses on are not Main Street storefronts or commercial buildings that would have life drained out of them and replaced with people’s extra junk. “We’re not looking to be the new retail user. We’re looking to monetize and convert spaces that are typically not seen or not really used,” Lau says.
More spaces are opening up for this kind of new use as the pandemic continues to reshape real estate, Lau says, but she believes Stuf is a business that will live on beyond the current situation. “Many spaces that we’ve looked at have been vacant for years, if not decades,” she says. “These are spaces that I’ve been looking at for 10 or 15 years and have been kind of obsessed with. So I finally did something about it.”