UMH Properties Inc. recently hit a major milestone, accumulating a portfolio of more than 1,000 self-storage units.
The Freehold, N.J.-based company, best known as an owner and operator of 139 manufactured-home communities east of the Mississippi River, recently purchased a self-storage facility adjoining one of its communities in Anderson, Indiana. The acquisition of the 246-unit facility brings the total of storage units now owned by the company to more than 1,000, spread across four states and eight sites – with all of the storage facilities adjoining or near UMH’s manufactured-housing communities. Those 1,000-plus units don’t necessarily make UMH a major self-storage player in the U.S. But they do make UMH one of the more distinct storage owners around due to its units being so closely tied to specific housing communities.
“Manufactured” homes are made in factories, later assembled on sites and sold (or rented) at considerably lower prices than traditional non-manufactured homes. A publicly traded real estate investment trust, UMH Properties, which was founded in 1968, bought its first self-storage facility in 2013, as part of an overall deal to acquire a manufactured housing community in Elkhart, Indiana.
UMH Properties Inc
“That’s how we learned about self-storage, buying that first facility,” said Daniel Landy, executive vice president at UMH and grandson of company founder Eugene Landy.
“It was a learning experience,” added Landy, whose father, Samuel Landy, serves as CEO of UMH.
Daniel Landy recently talked about UMH’s storage holdings and the manufactured-homes business in general with the Storage Beat. Read the edited transcript below.
What’s the strategy behind UMH’s storage program?
Daniel Landy: “We believe that with a self-storage property adjoining or near one of our communities, we have a lot of advantages over other self-storage operators. As you know, our company’s main focus and mission is providing quality, affordable housing. So our communities already have a staff that every day is providing housing (services) to residents. We have a staff that’s maintaining people’s homes, roads and the infrastructure in communities. We really have a great hands-on staff. A lot of other self-storage facilities are very automated, but our self-storage facilities are able to have this incredible staff presence.”
I assume part of your strategy is based on the fact that manufactured homes tend to be smaller than other homes and so people need self-storage a little bit more. True?
“Our homes have a variety of sizes. But you’re correct in that there’s definitely certain tenants in homes that don’t satisfy their complete space needs for storage. With all of our rental homes, we supply a storage shed for them. But even with that, a lot of people still need more storage. Our big advantage is our managers and maintenance people know the residents in our community and they can tell who has big storage needs, and we’re able to market it effectively to our existing residents. The existing staff is also good at marketing storage to future residents.”
Does your company buy self-storage facilities or actually develop new self-storage buildings?
It’s a combination of the two. But I would say we mostly buy facilities adjoining our communities. We have more than 2,000 acres of vacant land that we own and our primary mission is to increase our home sites. But from time to time that land might not be zoned or have the best use for home sites. So it sometimes makes sense for us to develop self-storage. We’ve done that in in New Jersey. We also have plans to expand certain other self-storage facilities.
You currently have eight self-storage facilities. Do you see that number rising over the next five years?
I think we will see it rising. But it’s hard to give a specific number by how much it will rise. A lot of it depends on what is for sale and how we determine how to use our vacant land. We have existing plans to expand some of our self-storage facilities. We currently have plans to add at least 100 self-storage units.
What’s the biggest surprise your company has discovered about self-storage since you got into the market?
I would have initially assumed that the self-storage would be predominantly used for personal items. If you have home renovations or if moving or if you just need to store more personal stuff, that’s what we thought residents would be using our self-storage for. And that’s true for a lot of people. But what’s been really amazing is that a lot of our residents are landscapers, entrepreneurs, and we have many renting these storage units to help out their businesses. A lot of businesses rent. It feels good to know that we’re helping our residents run their business and to be entrepreneurs.
What’s the toughest challenge now facing the self-storage industry?
At this current moment, I would say it’s higher interest rates and inflation. Most of our markets have good demand. But there’s certainly some markets that we’re in where the economy has a significant impact with interest rates. One of our facilities is near the RV industry. The employers there are having a harder time, and the employees have higher costs of living, which makes them evaluate some of their storage needs.
What’s your assessment of the current self-storage market in general? Is it healthy, overbuilt?
From what we’ve seen, it depends on the market. As I said, there are certain areas that are more sensitive to interest rates and inflation. … Still, in the long-term, with a growing number of senior citizens needing storage, I think that storage has a really good trajectory.
Is the manufactured-homes market also growing? What is its prospects? Obviously, your business model is kind of based on the success of manufactured home communities.
A lot of our success is based on workforce housing. It’s been positive. A lot more manufacturing is going on in the United States. That’s a thing you see voters caring about – more manufacturing jobs. And UMH has a lot of communities in the Marcellus Shale and Utica Shale regions, where there’s a lot of natural gas fracking. So potentially those areas will do very well moving forward. We’re also near many car manufacturing areas. Most of our communities are in working-class areas.
Jay Fitzgerald
Jay Fitzgerald has more than 20 years of experience covering business and economics for publications and online sites, with a growing emphasis on blogs, social media and podcasts.