U-Haul’s Storage Play: A Fortress in a Shifting Landscape

In an era of economic uncertainty, investors are increasingly drawn to sectors offering resilience and steady returns. Few industries fit that bill better than self-storage, a $45 billion market in the U.S. alone, fueled by urbanization, e-commerce, and the rise of transient lifestyles. U-Haul Holding Company (NYSE:UHAL) is now positioning itself to dominate this space—and investors should take notice.

The Strategic Shift: Closing Showrooms, Opening Lockers

U-Haul’s recent decision to shutter its Zanesville, Ohio, retail location—a 46-year-old store—wasn’t an act of retreat. Instead, it’s part of a deliberate pivot toward self-storage, a move that capitalizes on three unstoppable trends:

1. Urbanization: As cities densify, space for traditional moving services shrinks, while demand for flexible storage surges.
2. E-Commerce: Online shopping’s boom has created a need for temporary storage for both consumers and retailers.
3. Demographic Shifts: A younger, more mobile workforce prioritizes short-term housing over long-term ownership, driving demand for storage solutions.

The Zanesville closure—redirecting customers to a newer facility—highlights U-Haul’s focus on operational efficiency. By consolidating underperforming retail locations into high-margin self-storage units, the company is optimizing its 86.8 million-square-foot portfolio, the third-largest in North America.

Scale, Strategy, and a High-Margin Moat

U-Haul’s self-storage portfolio is a strategic asset with multiple advantages:

• Economies of Scale: With 1,004,000 units spanning all 50 U.S. states and 10 Canadian provinces, U-Haul can negotiate lower costs for land and construction while maintaining premium pricing. In California, for instance, its self-storage units command $20.95 per occupied foot annually—a figure that outpaces most competitors.
• Resilience in Volatile Markets: Self-storage occupancy held steady at 93.9% in Q1 2025 for same-store facilities, despite a 280-basis-point dip in overall occupancy. This stability stems from the sector’s inelastic demand: people always need space to store their belongings, regardless of economic cycles.
• Growth Pipeline: U-Haul is expanding aggressively, adding 17 new self-storage locations in Q1 2025 and pouring $402 million into real estate development. With 7.7 million square feet under construction and 9.2 million pending, the company is primed to capitalize on rising rates of storage utilization.

The Numbers Tell a Compelling Story

While U-Haul faces headwinds—rising fleet costs, occupancy lags in new facilities—the fundamentals remain bullish:
- Revenue Growth: Self-storage revenue jumped 12% in 2024, and U-Box services (modular storage units) are a bright spot, contributing $9 million to “other revenue” in Q1 2025.
- Cost Efficiency: Despite a $21.5 million rise in operating expenses, U-Haul is modernizing its fleet (spending $539 million on new trucks) to improve utilization and reduce maintenance costs.
- Cash Flow: With $1.567 billion in cash and credit, U-Haul can fund expansion without diluting shareholders.

Why Invest Now?

The self-storage sector is underpenetrated. Even as U-Haul expands, the average North American market has only 0.2 self-storage units per capita—far below saturation. Meanwhile, competitors are slashing prices to gain market share, but U-Haul’s focus on customer service (e.g., 24/7 access, climate-controlled units) allows it to sustain pricing power.

Risks? Yes. But the Upside Outweighs Them.

Critics may point to rising construction costs or overexpansion risks, but U-Haul’s disciplined approach—prioritizing markets like Texas (92 stores) and California (highest revenue per foot)—mitigates these concerns. The company’s Q1 2025 results, including a 4.5% rise in same-store revenue per foot, underscore its ability to monetize its assets effectively.

Final Verdict: A Buy for the Next Decade

U-Haul’s pivot to self-storage isn’t just a tactical move—it’s a strategic bet on the future of space. With a fortress balance sheet, a scalable model, and a sector primed for growth, U-Haul is uniquely positioned to thrive. For investors seeking stability and growth, this is a stock to buy—and hold—through market turbulence.

Act now. The storage boom is just getting started.