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1:27

there, it's

1:29

Stephen Dubner and this is

1:31

a bonus episode. Actually a pair of

1:34

episodes from the Economics of Everyday

1:36

Things, another show that we make

1:38

here at the Freakonomics Radio Network.

1:41

The host of this show is Zachary

1:43

Crockett, a journalist who loves to explore

1:46

and explain, well, the

1:48

economics of everyday things. For instance,

1:51

car colors and storage

1:53

units. I am hoping that

1:55

after you hear these episodes, you will start listening

1:58

every week to the economics. of

2:00

Everyday Things, which you can find on any

2:02

podcast app. Here's Zachary. Like

2:08

a lot of men his age, my

2:10

dad likes to talk about how everything

2:12

used to be better. Shoes

2:15

used to last longer. Musicians used

2:17

to be more talented. Movies

2:19

used to cost a couple bucks. And

2:23

cars? They

2:26

just had a lot more character. My

2:29

first car was a 1965 Chevy Impala.

2:35

And this was a real car. It

2:38

was a real car. I bought from

2:40

a neighbor. It had 25,000 miles

2:42

on it. And

2:45

I paid $400 for it.

2:47

I mean, the personality that

2:49

it had. Every

2:51

detail about it. The

2:54

headlights, the tail lights, the

2:57

thunder, the bumper, the

2:59

doors. You could punch

3:02

the 65 Chevy

3:04

and you'd

3:06

break your

3:09

head. A

3:12

big part of that character was the multitude

3:14

of colors that you'd see on the road

3:16

back in the 1960s and 70s. In

3:19

the old days, we had variations

3:21

of green and variations of brown

3:23

tan colors. There were

3:25

light blues, lots of different shades of

3:27

blues. My uncle Guy

3:29

had like a

3:31

canary yellow Cadillac. He'd

3:34

drive it with a top down. But these

3:37

days, he says, it seems like

3:39

all the cars on the road look the same.

3:42

Black, white, silver, black, white,

3:44

silver, black, white. There

3:47

is some truth to that. Today's

3:49

cars are a lot less colorful than

3:51

they used to be. 80%

3:54

of vehicles sold in North America are

3:56

now what's called achromatic. White,

3:59

black, of silver. That's

4:02

up from just 36% 50 years

4:04

ago. Now if

4:06

you're like my dad, you might say that

4:08

the automobile industry has lost its flair. But

4:11

according to car color designers, there

4:14

are more color options than ever before.

4:17

It's just that those mundane tones

4:20

are what today's young buyers actually want.

4:25

We know that boomers and Gen X

4:27

are definitely looking for some of

4:29

those pops of color, so they're

4:31

more interested in the tangerine orange.

4:33

And we found that millennials are

4:35

gravitating to gray. For

4:38

the Freakonomics Radio Network, this is the

4:41

economics of everyday things. I'm

4:43

Zachary Crockett. Today, car

4:45

colors. For

4:48

the earliest mass produced cars, paint

4:51

was more of a practicality than a

4:53

form of expression. Throughout

4:55

most of the 1920s, Henry Ford's

4:57

famous Model T only came in

4:59

one color. Ford was

5:01

rumored to have said that a customer may

5:04

have a car in any color he desires

5:06

so long as it is black. Ford's

5:09

affinity for the color was rooted in

5:11

economics. Black paint was cheap

5:13

and durable, and using only one

5:15

color sped up production. As

5:20

cars became more common, consumers wanted

5:22

theirs to stand out. Automakers

5:25

responded with different color options.

5:28

In the 1930s, the first metallic finishes

5:30

hit the market. They were

5:32

made out of fish scales, and it took 20,000

5:34

herring to make a pound of paint. In

5:37

the 1950s, you could find cars

5:39

in pink and turquoise. The

5:42

60s and 70s were populated with yellow

5:44

and green muscle cars. And

5:46

by the 1980s, vehicles came in just about

5:49

any color you could dream up. The

5:52

80s was a very colorful decade. There

5:55

was a lot of green cars, red cars, blue

5:57

cars. That's Mark Gutiata.

6:00

He's the global head of design at

6:02

BASF, one of the largest car paint

6:05

manufacturers in the world. And

6:07

the acromatics, the colors that are

6:09

black, gray, and white, and silver,

6:12

they were not so dominant. But

6:15

Gucciar says that around the beginning

6:17

of the millennium, car colors became

6:19

a lot less colorful. Silver

6:22

quickly became the color of choice, largely

6:24

thanks to emerging technologies. You

6:27

know, mobile phones were silver, your stereo was

6:30

silver with a lot of buttons and

6:32

things to turn. And then

6:34

this famous American company came in and invented

6:36

a tool and the product was white. That

6:41

famous company was Apple. And

6:44

the device, of course, was the iPod. It

6:47

came out in 2001, around

6:49

the same time the company opened its first

6:51

retail locations. It

6:53

was the transporting color of being advanced,

6:56

high tech, forward thinking.

6:59

The color took over in rapid speed.

7:02

And it's still number one globally. Today,

7:06

34% of all cars in North America are white. After

7:11

that comes black with 22%, silver with 14%, and

7:13

gray with 10%. No

7:18

other color cracks double digits. Now,

7:21

there are practical reasons to buy a

7:23

white car. Lighter colors

7:25

reflect more sunlight, which reduces the

7:27

need for AC, increasing fuel

7:30

economy and decreasing carbon dioxide

7:32

emissions. But the main

7:34

reason people buy achromatic cars is

7:37

that they're just sort of inoffensive. We

7:40

did some research on, you know, new car

7:42

buyers, like what they were looking for and

7:45

what people like personally as

7:47

a color actually has nothing

7:49

to do with what they buy. There

7:52

are a few possible explanations for this. For

7:55

starters, cars are often shared within

7:57

a family. And achromatic colors

8:00

make good compromise picks. Dealerships

8:23

We have around 120 different shades

8:25

of gray. 50 shades

8:27

is not enough. Whether

8:32

you have a gray car or a pink car,

8:34

it's likely that BASF was involved in

8:37

the color. More than

8:39

50% of all cars produced globally

8:41

each year have at least one

8:43

layer of BASF paint. We

8:45

work with nearly everybody in the industry

8:48

to develop colors every year. It's

8:50

roughly 900 colors that

8:53

are currently running in the market. Every

8:56

major car manufacturer also has its

8:58

own in-house design team. And

9:01

when a brand wants to develop a new color, the

9:04

conversation usually starts with someone

9:06

like Nikki Rydell. I'm

9:08

a carline planning manager at Subaru of

9:10

America. Rydell's job is

9:13

to help oversee all of the little

9:15

design choices that go into creating a new

9:17

Subaru model. From the color of

9:19

the stitching on the seats to the color of

9:21

the exterior paint. The first

9:23

thing Subaru's team does is look at

9:25

what's popular in the spaces where their

9:27

customers are interacting. We're really

9:30

lucky at Subaru because we know our customer

9:32

really well. Definitely people who

9:34

want to take the path less followed.

9:36

They're always looking for their next adventure.

9:39

So we're looking at snowboards. We're

9:42

looking at skis. We're looking at

9:44

skate decks. We're looking at all

9:46

of the clothing like ski jackets and that

9:48

sort of thing. A few

9:50

years ago, they noticed a trend.

9:53

We started seeing everything kind of shifting

9:56

toward cooler tones. And so

9:58

we developed Cool Gray Kooky. Over

10:03

the past couple of years you've probably

10:05

noticed curves in this color. It's

10:07

a light gray with a bluish tone and

10:09

it's got kind of a ceramic look

10:12

to it, no sparkle. Cool

10:14

gray khaki is Subaru's invention,

10:17

but many manufacturers from BMW

10:19

to Honda have introduced very

10:21

similar shades. Cool

10:23

gray khaki is a cooler muted

10:26

tone. It has a very

10:28

flat finish so it doesn't have

10:30

a lot of metallic or pearl

10:33

in it, which also suggests a

10:35

rugged aesthetic and a more modern,

10:37

younger look. When we all

10:39

saw it, we just kind of knew it was a hit. Before

10:42

color like cool gray khaki is

10:44

finalized, it's tested in a light

10:46

studio that simulates different settings. Light

10:49

is really important, especially when you're talking

10:52

about a vehicle. The sunlight that

10:54

you see in Southern California is

10:56

going to be very different from Maine. The

10:59

other consideration is that these cars will

11:01

be seen in showrooms. One

11:04

of the settings that we have that we

11:06

check are what our retailers are using for

11:08

overhead lighting in the showroom. Make

11:10

sure that that also looks as good as we want

11:12

it to. They also have

11:14

to make sure the paint formula can hold

11:17

up in different environments. Many

11:19

car manufacturers send painted car parts to weathering

11:21

facilities in Florida where they're put out in

11:24

the sun to see how the paint is

11:26

affected. Florida has

11:28

high intensity sunlight, lots of rain,

11:30

and high humidity, which makes

11:32

it an ideal place to test for cracking,

11:35

peeling, and moisture sensitivity. Once

11:38

the color has passed all the tests, manufacturers

11:41

work with paint suppliers like BASF to

11:43

produce the color at scale. Again

11:46

Mark Gujjar. So

11:48

what they get from us is like a

11:51

mixed material with all the ingredients that are

11:53

in. Even

11:56

a seemingly plain color, like white or

11:58

gray, is a lot more dimensional. than

12:00

it seems. When a car is

12:02

painted at a factory, the process begins with

12:04

something called an E-coat. The

12:07

car parts are often dipped in a

12:09

bath of zinc phosphate, and an electrical

12:11

current binds a layer of resin to the

12:13

surface. The parts spend

12:15

time in an oven, and then robots

12:18

spray them with primer and a base

12:20

coat that includes all kinds of effects.

12:24

So you have these glitter sparkles

12:26

that you can put in, like

12:28

very different textures, very soft, silky

12:30

textures you can generate. The

12:33

final step is typically a clear coat

12:35

that gives an extra glossiness to the

12:37

finish, but also protects the

12:39

paint from UV lights and bird poop. All

12:42

the layers together, they make a thickness of a

12:44

hair, so it's extremely thin

12:47

and it's extremely technical. Through

12:52

conception to production, bringing a new color

12:54

like cool gray khaki to the market

12:56

can take up to six years. So

12:59

in 2024, Subaru's team might be working

13:01

on the new colors for the 2030

13:03

lineup. And

13:06

even after all that work, Rydell says

13:08

that there are still slight variations in

13:10

the final product of any given color.

13:13

Every time you formulate the color, it's not going

13:15

to be 100% exact. They're

13:19

virtually imperceivable, but if you put

13:21

one body panel next to another, there's a chance that

13:23

you could see the difference. So

13:25

the way that they're spraying are

13:28

white in Japan, could look slightly

13:30

different from what we're spraying in the

13:32

US factory. So will

13:34

every hit new color be another variant of

13:37

gray? Probably

13:39

not. Some industry experts are

13:41

predicting a more vibrant future. That's

13:44

coming up. Economics

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Absolutely, positively, FedEx. Car

15:37

manufacturers like to keep their offerings

15:39

fresh and trendy. So most

15:41

new car colors only have a lifespan of

15:43

three to four years, even

15:45

when people love them. During

15:48

its run from 2018 to 2023,

15:51

Subaru's cool gray khaki accounted for

15:53

around 18% of

15:55

sales for the models that were available in the

15:57

color. If you go to Subaru

15:59

forums, you'll still find customers

16:01

singing its praises. But

16:04

in the end, it was phased out to make

16:06

a room for its successor, an

16:08

earthy shade called Alpine Green. Nikki

16:12

Rydell says Subaru fans are a

16:14

little more open to bold colors than

16:16

the typical car better. We're

16:18

able to sell bright blues

16:20

and greens and orange colors.

16:24

We're lucky because we have always been kind of

16:26

that quirky, fun car. So

16:28

we kind of lean into that and make sure that

16:30

we're offering really fun colors as much as we can.

16:33

Take, for instance, a color called Geyser

16:35

Blue, which debuted on some of Subaru's

16:38

2022 models. We

16:40

took blue and mixed a little bit of green into

16:43

it. Green is not

16:45

usually a great seller for cars, but Subaru

16:47

does it really well. And then

16:49

we took all of the metallic flake

16:51

out. So that kind of psychologically signifies

16:53

that it's more of a rugged

16:56

off-road color. It's beating

16:58

out black, white, gray, and that's pretty

17:00

tough to do, yeah. Car's

17:06

are an expensive product, and

17:08

color has a big impact on sales.

17:11

So car companies like Subaru have to make

17:13

sure they produce the right amount of models

17:15

in each color. We don't

17:18

want to have too many colors in the lineup. We

17:20

have to make sure that we've got just

17:22

enough choice so that our owners

17:24

can kind of pick what they want and

17:27

personalize their car, but not so many options

17:29

that we can't get the car to the right place,

17:31

to the right customer. Subaru

17:33

keeps a close eye on data from

17:35

dealerships. If they see demand for

17:37

particular shades slowing down, they adjust

17:39

accordingly on the factory lines. And

17:42

dealerships tend to keep reliable colors

17:44

like white, gray, and black on

17:47

hand. It's a lot easier

17:49

to convince somebody to buy a white car than it is

17:51

a bright orange car. Some

17:53

colors tend to sell better in certain

17:56

regions. The Sun melt

17:58

areas of the southern part of the... country

18:01

is going to sell more white cars than

18:03

they would black cars just because of the

18:05

heat. So we would probably allocate maybe more

18:07

white cars down there. Rydell

18:11

says there are also some generational differences

18:13

in who buys certain car colors. We

18:16

know that boomers and Gen X are

18:18

definitely looking for some of those pops

18:21

of colors. So they're more interested in

18:23

the tangerine orange, the bright oranges. And

18:26

we found that millennials are gravitating the colors

18:28

that are closer to like the cool gray

18:30

khaki. They're always attracted to

18:33

more muted colors compared to

18:35

other generations. But even

18:38

millennials are starting to come around to

18:40

more colorful cars. I

18:43

think we've maybe bottomed out on

18:45

minimalism. And I think

18:47

people are starting to look for

18:49

character now and personalization. Some research

18:51

has suggested that there's a correlation

18:54

between car colors and how the economy

18:56

is doing. Sombre tones like

18:58

gray and black rise during times of

19:00

hardship. And when things are

19:02

looking up, brighter colors tend to reemerge. At

19:06

BASF, Mark Guchar has noticed a

19:08

slight shift away from the dominant

19:10

achromatic colors. What we

19:12

see is a huge diversity in colors. So there's

19:15

more and more color shades coming in. The

19:17

last year's production showed in every region of

19:20

the world purple violet

19:22

colors. And that was something

19:24

really not there for a long, long time. Nearly

19:27

every car brand on the market has

19:30

experimented with an adventurous color or two

19:32

in recent years. Fiat

19:34

Chrysler offered the Jeep Wrangler in

19:36

what they call Snazberry, kind of

19:38

a reddish maroon. Toyota

19:41

released a four runner SUV

19:43

in an extremely vivid voodoo

19:45

blue. BMW

19:47

had Sao Paulo yellow, which looks

19:49

like a highlighter. Colors

19:52

like this can raise the price of a

19:54

new car. There are

19:56

different pigments and pigments vary in

19:58

cost. There's also the application process,

20:00

if it's a single coat, dual coat

20:02

or a tri-coat, there's all

20:05

different effects. So we call a

20:07

metallic, a pearl, or a silica

20:09

finish. Every time you add another

20:11

layer of paint, you're adding time to

20:13

the line. These Boulder

20:15

colors may cost more, but they

20:18

could also pay you back in the long run. The

20:21

vehicle search engine, IC cars, analyzed

20:23

pricing data on more than a

20:25

million used cars and

20:27

found that color has a surprisingly

20:29

strong impact on resale value. The

20:32

colors that retain the most value, yellow,

20:34

orange, and green. But

20:37

at least for now, most car

20:39

buyers still spring for the less

20:42

exhilarating cues. And a

20:44

few years ago, when he found himself in the market

20:46

for a new car, even my

20:48

dad, Tom Crockett, joined

20:50

the club. I bought

20:53

a used 2014 Subaru Impressa. What

20:58

color did you get? I bought a white car

21:00

because it was the only used car on the

21:02

lot. Believe

21:08

it or not, I actually like the

21:10

color white. The only problem is, you

21:12

know, now when I go out, look

21:14

for my car, I have to sort

21:16

through multiple white cars to

21:19

make sure that I'm getting in the right car. Hey,

21:30

it's Zachary here. Thanks for checking out

21:32

these episodes of the economics of everyday

21:34

things. Let us know what

21:37

you thought of our look at car colors.

21:39

We're at everydaythingsatfreeconomics.com and

21:41

you can find more of our weekly show in

21:43

your podcast. All right, here's

21:45

our second episode. On a kind

21:48

of business that's been springing up like crab

21:50

grass all over the country. When

21:57

Caracologie went through a breakup six years ago.

22:00

she had to move out and get a place of her

22:02

own. The new place was

22:04

smaller, so small that she didn't have

22:06

room for all of her stuff, and

22:09

she didn't want to get rid of it. So

22:11

she decided to rent a storage

22:13

unit. Mainly, things

22:15

I stored were books, kitchenware,

22:19

I have a lot of clothes and

22:21

gear, you could say. So

22:23

winter clothes or summer clothes

22:26

or snowboards. As

22:28

people in my family started moving out

22:30

of their homes, I started inheriting a

22:32

lot of knickknacks, heirlooms,

22:35

which I just didn't have room

22:37

for. Koloji isn't

22:39

alone in her quest for more space.

22:42

It's estimated that one in five Americans

22:44

rents a storage unit. High

22:47

housing costs, urbanization, and rampant

22:49

consumerism have made self storage

22:51

into an estimated $45 billion

22:54

industry in the US alone. And

22:59

real estate investors are clamoring for a piece

23:01

of the action. Self

23:07

storage has become sexy because people have recognized

23:10

what a strong fundamental business it is. Americans

23:13

love their stuff and they don't want to get rid of

23:15

it. In

23:19

the second part of this special episode of

23:21

the Economics of Everyday Things, storage

23:23

units. The

23:28

modern self storage industry traces its roots back

23:30

to the 1960s. The

23:33

earliest facilities were more about investing in

23:35

land than building a viable business.

23:38

It began with folks who have

23:40

good vision and they imagined where

23:42

population was going. That's

23:45

Anne Marie Dicaster. She's

23:47

a consultant who's been in the self storage industry

23:49

for 22 years. They

23:52

tended to buy land outside of city

23:54

centers, anticipating that the population would move

23:56

there. And in the meantime, they put

23:58

a self storage. storage facility on it

24:00

so that they could generate cash. For

24:03

these early entrepreneurs, storage units

24:05

were what's called a covered land play.

24:08

You buy some cheap land not too far

24:10

from a growing population center and

24:13

wait until there's enough people nearby to build

24:15

a hotel or a shopping mall. In

24:17

the meantime, you need to kettle taxes. So

24:21

you set up a business that's cheap to operate

24:23

and brings in a little cash, like

24:25

a storage facility. But

24:27

a funny thing happened. Investors

24:30

realized that cell storage is among

24:32

the highest and best uses. So

24:34

instead of selling those, they kept them.

24:41

Today there are around 52,000

24:43

storage facilities in the United

24:45

States, more than 20 million individual

24:48

units. About two

24:50

thirds of those facilities are owned by

24:52

small to mid-size operators. The

24:54

rest of the market is controlled

24:57

by a handful of large national

24:59

corporations, like Public Storage, U-Haul, CubeSmart,

25:02

and Extra Space Storage. My

25:05

name is Zach Dickens, and I

25:07

am the Chief Investment Officer with Extra Space

25:09

Storage. Dickens has been

25:11

with Extra Space Storage for more than two

25:13

decades. During his time

25:15

there, he's watched the company grow into one

25:18

of the largest self-storage operators in the world.

25:21

We're around 283 million leasable

25:23

square feet today and

25:25

2.6 million units. This

25:29

unit varies in size. On the

25:31

lower end, some are just 25 square feet. Those

25:34

are generally good for someone like a college

25:36

student. They hold a twin mattress, a dresser,

25:39

and maybe a few boxes. On

25:41

the bigger end, you've got units that are around

25:43

the size of a two-car garage. And

25:46

it goes up from there. The monthly

25:48

rental on a unit varies based on size,

25:50

location, and how fancy it is. Some

25:53

are climate-controlled. Others get hot

25:55

in the summer and cold in the winter. The

25:58

average unit price today is $1.5 billion. somewhere around $180

26:00

a month per unit. And

26:04

that's probably on a unit that's a little bit bigger

26:06

than a 10 by 10 unit or 100 square feet.

26:10

For the facility owner, most of that rent

26:12

is perfect. Operators have

26:14

to pay for things like property tax,

26:16

insurance and utilities. And many

26:19

facilities have a manager on site

26:21

during business hours. But

26:23

as far as real estate goes, storage

26:25

is a pretty low maintenance business.

26:28

If you looked at residential, when somebody

26:30

vacates a property, you have to

26:33

go through a process of doing a lot of

26:35

tenant improvements. Whereas on the storage

26:37

side of it, you simply roll up the door,

26:39

they take their belongings and we sweep out the

26:41

unit and it's ready to rent for the next

26:43

person. It's also a

26:45

business in constant demand. Around

26:48

nine out of every 10 units tend

26:50

to be occupied at any given time. And

26:53

tenants are easy to replace when they vacate.

26:56

If you are in a retail space and

26:58

you have an anchor tenant go out

27:00

of business like a Bed Bath and

27:02

Beyond or some of those that have

27:04

had issues, it changes your economics dramatically.

27:07

Whereas if you lose one or two

27:09

storage customers, it's a small loss to

27:11

the property and we can quickly replenish

27:13

that with another customer. Most

27:18

self storage units are offered on month

27:20

to month leases. Thicken says that

27:23

most people think they'll only have to use the unit

27:25

for a couple months. But they'll actually

27:27

end up staying much longer. They

27:29

typically stick around 14 to 16 months on

27:31

average. A

27:34

move into a storage unit often revolves

27:36

around some kind of major life event.

27:39

Self storage consultant Anne-Marie D'Costa

27:42

says it could be a college student

27:44

graduating, a military officer being deployed, or

27:47

a family moving into a new home. People

27:50

need storage when they're in transition. When

27:52

life events happen like having babies

27:55

or maybe their parents are growing

27:57

elderly and they need to move in with you. When

28:00

divorce happens, often there's a period

28:02

of uncertainty and transition. When

28:05

people move, they need storage. They're going to sell

28:07

their home, they have to get the clutter out

28:09

so they rent storage. But

28:12

another large chunk of the customer base is

28:14

people who simply don't have room to store

28:17

all of their stuff. We

28:19

find a lot of use between people

28:21

that are renting because they don't have

28:23

a lot of space within their apartments.

28:26

We're like an extension of their apartments where

28:28

they can store their holiday belongings,

28:31

their decorations and all that. This

28:34

is especially true of millennials who

28:36

now make up the largest share

28:38

of storage renters in America. Baby

28:41

boomers, they tend to store memories.

28:44

They store grandma's living room

28:46

furniture or china. They

28:48

don't visit that stored property

28:51

very often. But millennials

28:53

and Gen Z, they tend

28:55

to use self storage as an extension

28:57

of their home. They leave

28:59

in the morning, they get their kayak, they go

29:01

kayaking, they come back late in the day and

29:03

they put it back in the storage unit because

29:06

they don't have any pay cells to store it.

29:09

With the rising cost of housing,

29:11

many renters are downsizing. Across

29:13

the nation, the size of new apartments

29:15

and urban centers is also decreasing,

29:18

partly because developers are building

29:20

more studio apartments. At

29:23

the same time, Americans are buying

29:25

more stuff than ever before. It's

29:28

the American love affair with their stuff

29:30

that creates the demand for self storage.

29:33

We are a wealthy country with a lot of things

29:35

and we want to keep them. So

29:38

what exactly are all of these things that people

29:40

are storing in their units? And

29:42

what happens when they stop paying rent? That's

29:45

coming up. Freakadomics

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Amika says, empathy is our best

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policy. During

32:21

his time at extra space storage, Zach

32:24

Dickens has seen people use storage

32:26

units for all kinds of things.

32:29

You see a lot of couches, that

32:31

sort of thing. We

32:33

have musicians that have to store their

32:35

equipment in a temperature regulated environment. People

32:38

with vehicles that want to preserve those vehicles,

32:40

people with heirlooms that don't want to store

32:42

them at home, small businesses

32:44

that want to store excess product.

32:47

Pharmaceutical reps use us because they're not allowed

32:49

to store their medicines on their

32:52

own property at home. And so they'll use

32:54

us as a secure alternative. There tenants

32:56

are almost always required to get insurance

32:59

on their unit. And they're generally

33:01

prohibited from storing more than $5,000 worth of stuff.

33:05

What you put in there though, is entirely

33:07

your business. That is

33:09

until you stop paying for it. In

33:12

that case, your stuff goes to the

33:14

highest bidder. In

33:19

most States, when a customer is late on rent, storage

33:22

operators are required to send out multiple

33:24

notices over the course of 30 or

33:26

60 days. When the

33:29

notices go unanswered, the unit's contents

33:31

are seized and auctioned out. Reality

33:34

TV shows like Storage Wars and

33:36

Auction Hunters often make it

33:38

seem like storage units full of hidden

33:40

treasures are abandoned on a regular basis.

33:44

Anne Marie de Coster, the storage

33:46

industry consultant, says the truth

33:48

is a little less glamorous. It

33:51

is very, very rare that

33:53

a foreclosure sale at auction generates enough

33:55

money even to cover the rent

33:58

too. Because for the most part, For

34:00

the most part, people store memories. You

34:02

know, your children's schoolwork and your

34:04

grandmother's dresser and clothing,

34:08

furniture, household goods. And

34:11

those are not things that sell high in

34:14

a public auction where the consumer

34:16

is determining the value of it. That's

34:19

not to say there isn't the occasional crazy

34:22

find. In

34:24

1989, a contractor in Long Island paid

34:26

$100 per unit and found

34:28

a futuristic car used in the James Bond

34:30

film, The Spy Who Loved Me. He

34:33

later sold it at auction for just under

34:35

a million dollars. The winning bidder

34:37

was Elon Musk. Tecoster

34:40

has a few tales of her own. We

34:43

had a whole unit of coffins that

34:45

needed to be auctioned off because the business had gone out

34:47

of business. So the

34:49

owner operator contacted mortuaries and

34:52

then, you know, five or ten of them bid. That

34:55

doesn't mean the storage facility operator got

34:57

a windfall. Many

35:00

proceeds from an auction that are

35:02

in excess of the rent owed

35:04

are returned to the renter. And

35:07

many times the renter can't be

35:09

found. They moved, they

35:12

died, they are in jail.

35:15

Typically if money's not claimed, it reverts to the

35:17

state or the county. Other

35:19

items don't have any monetary value

35:21

but still require legwork from the

35:23

storage operator, like an urn

35:25

full of cremated human remains. Those

35:29

are the cremains of a loved one who maybe died 40 or 50

35:31

years ago and they were very

35:34

well cared for for 10 years, 20 years, 30 years. And

35:37

then there's this dilemma, you know, what do you do

35:39

with them? And many, many operators

35:41

will call one church and

35:43

cemetery after another to find

35:46

a place where they can bring the

35:48

cremains. The relative secrecy

35:51

of storage units sometimes leads to

35:53

more morbid fines. A

35:55

unit in Colorado contained a pile of

35:57

police evidence, including a bloody rope. and

36:00

an axe. The buyer

36:02

of a Seattle unit discovered the bodies of

36:04

a woman and her two sons, who had

36:07

been missing for 12 years. There

36:09

have been units that contained meth

36:12

labs, boxes full of stolen passports,

36:14

and illegal firearms. But

36:16

stories like this are pretty rare. Industry

36:19

experts say that only around 1-3%

36:21

of storage units are auctioned off

36:23

in any given year. And

36:26

every state has laws that require plenty

36:28

of notice before an operator can sell

36:30

someone's stuff. No

36:32

one goes into some storage to

36:34

sell renters belongings. They go into

36:36

self-storage to rent space. And

36:39

when a renter is not paying rent, what they

36:41

really want is to be able to rent it

36:43

to someone who will. And

36:46

there's usually a new tenant waiting in the

36:48

wings, because storage is

36:50

a business that bucks economic trends.

36:56

When things are good and people are

36:58

buying more things, self-storage does very well.

37:01

But when things are not as good and

37:04

people are hurting, storage does

37:06

well under those circumstances too, because

37:08

that's when people have to combine households

37:10

or they have to move into smaller

37:12

living quarters. So one of

37:14

the great dynamics of the industry for

37:16

an investor or an owner operator is

37:18

that, regardless of the business cycle, self-storage

37:21

tends to do well. Most

37:24

storage facilities are still owned

37:26

by small-time operators. But

37:28

in recent years, the industry has followed

37:30

the path of nursing homes, mobile home

37:33

parks, and car washes. Institutional

37:35

investors have been consolidating smaller

37:38

businesses in a bid to

37:40

gain market share. And that has

37:42

led to expansion. In

37:45

2023, operators built 49 million

37:48

square feet of new storage space,

37:50

nearly 16% more than they built

37:52

the year before. In

37:55

some high-growth cities, storage units have been

37:57

popping up so fast that legislators

37:59

have been enacted moratoriums temporarily

38:01

banning new construction. The

38:04

industry has been fighting back. I

38:07

think it's short-sighted to try to

38:09

prevent cell storage development. It's

38:12

a great way to use space

38:14

that's not otherwise used. You

38:16

know, the triangular-shaped piece of

38:18

land that has a funeral

38:20

home on one side and a

38:22

55-plus community on the other side

38:24

and retail business

38:26

on the third side, that's a

38:28

great opportunity for cell storage because they don't

38:31

have to be a specific size or shape.

38:34

Storage units may be a symptom

38:36

of overconsumption, high housing costs, and

38:38

shrinking apartments. But for

38:40

tenants like Kara Koloji, they're

38:42

a home away from home, a

38:45

place to put all of the things we don't

38:47

really use but can't seem to part

38:49

with. You're not getting a

38:51

house, you know, and even if

38:53

you are, you're sharing living space with another

38:55

person. At least 50%

38:57

of my friends have storage space. If

39:04

you want to keep stuff, you're going to have to put

39:06

it in storage, whether it

39:08

be for two years, five years,

39:10

or longer, which isn't a

39:12

bad way to be because you can really

39:14

get down to the core of what is super important

39:17

to you in the long term. For

39:23

the economics of everyday things, I'm Zachary

39:25

Trockel, and

39:28

I am Stephen Dubner. I hope you like

39:30

the economics of everyday things. As much as

39:32

I do, please go to your podcast app

39:35

and start following it. There's a

39:37

new episode every week. And if

39:39

you have an idea for Zachary,

39:42

send an email to everydaythingsatfreakonomics.com, and

39:45

we can always be reached at

39:47

radio at freakonomics.com. And

39:50

we'll be back very soon with a

39:52

regular episode of Freakonomics Radio. Freakonomics

39:56

Radio and the economics of everyday

39:58

things have produced a future. and

40:00

Rend Bed Radio, this episode was

40:02

produced by Sarah Lilly and Zachary

40:05

Crockett, with help from Daniel Moritz-Rabson

40:07

and Julie Kanford. Our staff also

40:09

includes Alina Coleman, Augusta Chapman, Dalvin

40:11

Abouajie, Eleanor Osborne, Elsa Hernandez, Gabriel

40:14

Roth, Greg Rippon, Jasmine Clinger, Jeremy

40:16

Johnston, Lyric Boudich, Morgan Levy, Neil

40:18

Caruth, Rebecca Lee Douglas, and Zach

40:21

Lipinski. If you'd ever like

40:23

to read a transcript for one of

40:25

our shows or sign up for our

40:27

newsletter, all of that is at freakonomics.com.

40:30

As always, thanks for listening. I

40:34

bet that operator is pleased to find that

40:36

those coffins are empty. Yes, very

40:39

much so. You don't want to find one that isn't,

40:41

that's for sure. The

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