Is the Airbnb of Storage Going to Disrupt the Industry?
In 2017, Neighbor, the self-proclaimed Airbnb of self storage, launched with 2.5 million in capital. The startup was created in Salt Lake City as a convenient and affordable alternative to traditional self storage—the company claims to connect renters with storage that is 50% cheaper than a storage unit at a facility.
Self storage professionals—especially those in Utah and the 10 other states where Neighbor’s thousands of users reside—wondered if this might be an industry disruptor.
How it Works
To understand the potential impact that Neighbor could have on the growing self storage industry, it’s important to know how exactly the startup works.
True to its “Airbnb of self storage” tagline, Neighbor allows hosts to rent out extra space to renters who need storage. That space could be a garage, a basement, a backyard, a closet or a driveway. On the host end of the operation, it’s a seemingly easy gig. The host has extra space that they’re not using, and they’re able to rent it out to someone and collect monthly rent without really having to do anything. On the surface, it might even be easier than being an Airbnb host. There’s less turnover in tenants and therefore less cleaning and maintenance labor and cost. The service is free to hosts, who are able to set their own pricing. Neighbor makes their money by tacking on a 15% service fee, which they pocket. Payments are handled via Neighbor.
For renters, the option exists to search by neighborhood and by size (small is under 5x5, medium is 5x5 to 12x12 and large is 12x12 and up). They can also connect to Facebook and use the “store with a friend” feature which allows them to find a friend or friend of a friend who is a host on Neighbor.
Once a renter finds a storage space they’re interested in, they’re required to verify their identity with a driver’s license or passport and agree to not store prohibited items (prohibited items may vary by storage space, but typically include similar items that are prohibited at storage facilities such as explosives and drugs). Like a traditional storage unit, lease terms are typically month-to-month. Access hours are determined by the host. Renters insurance is not required, but the host is liable for gross negligence and the renter is liable for events such as floods. A background check is available for both hosts and renters upon request.
Effect on the Self Storage Industry
The drawbacks to Neighbor are similar to the issues that give Airbnb users pause. For starters, there’s the dilemma of technically doing business in a neighborhood that might not be zoned for commercial use. Neighbor also offers no protection or required insurance, and it’s entirely possible to get locked out by the host. If a host fails to give a renter access to their items or flat out refuses to, things could get messy. Unlike a self storage operator, a host on Neighbor isn’t necessarily going to be familiar with the intricacies of self storage management. For example, if the renter’s debit card on file is overdrawn resulting in missed rent, should the host begin the complicated lien process? Can the host auction off that renter’s belongings? And if the renter is an active duty military member, should the host brush up on the Servicemembers Civil Relief Act in order to avoid breaking the law? What if a host agrees to let a renter park an RV in their driveway only to find out that this is against the neighborhood’s HOA regulations?
Additionally, garage, basement, attic or backyard storage options through Neighbor cannot offer climate control, which is an increasingly important amenity to self storage users.
So should the self storage industry be concerned by Neighbor? Self storage legal professionals say no, as does common sense. After all, Neighbor’s main draws are convenience and affordability. In a booming self storage industry, those two benefits already exist.