Safety deposit boxes in short supply: Non-bankers cash in on the demand


NEW YORK -- In 1978 developer Scott Drake wanted a safety deposit box but was told his name would have to be put at the end of a lengthy waiting list.

Now Drake hopes that shortage will bring him as much as a 50 percent return on a $3.5 million investment in the next year.


Drake has joined the ranks of a growing number of entrepreneurs who have found an answer -- a very profitable answer -- to the national shortage of safety deposit boxes.

He said his plan is to set up a chain of safety deposit box facilities -- minus the banks that usually accompany them -- around the New York area.

His first such facility, the U.S. Safety Deposit Co., opened last month. If plans go as scheduled two more will go into operation in the next year or so.


There is one other similar facility in New York City and about 40 others that have opened in California, Florida, Texas and elsewhere in recent years.

'These aren't exactly going to be like McDonalds, springing up all over the place, but there is a demand for them that is going to be filled,' Drake said in an interview.

The concept is simple, explains Drake, who opened his facility (at 49th Street and Fifth Avenue) with developer Richard Goldberg and businessman Arthur Stevens.

Both individuals and corporations, he said, have a growing need for places to store valuables.

But the banks find the safety deposit box business, no matter how profitable it can be, an annoyance.

Drake in his turn says he would find the banking business too burdensome.

The businessmen who turn to Drake's service will find conveniences they could not get from a bank's safety deposit service.

They will pay heavily for it.

For $450 a year a customer can get 24-hour access to a 5-inch-by-10-inch safety deposit box.

Prices rise steadily to a top-of-the-line 30-inch-by-30-inch box for $5,700 a year.

'In the beginning there were some questions about the price,' Drake conceded. 'People were used to paying $40, $50 or $60 for their boxes in the bank and when they heard they would have to pay us $600 they were taken aback.'


For the extra investment there are extra services. Customers have access to 15 conference rooms, copying and telex machines and microfilm viewing equipment.

For those leery of taking the subway with their Renoir painting or $1 million diamond, limousine service can be arranged.

Sanford Garelik, former New York police chief and the security director for U.S. Safety Deposit, said the facility offers better security than a bank.

Armed guards are constantly on duty and a television camera system monitors the facility.

Burglaries, not armed robberies, are the biggest threat to security, Garelik said. Most burglaries of safety deposit boxes ocsur on the weekends when no one is standing guard.

But because the facility is never closed, Garelik said, the problem does not exist at U.S. Safety Deposit.

The walls, floors and ceiling are protected with 550 tons of inch-thick steel. The door to the vault weighs 9,000 pounds and is 7 inches thick.

Eventually there will be 10,000 boxes available. About 3,000 already are installed. Any property stored in one of the boxes will carry $50,000 worth of insurance.

Drake said his facility will have more of the larger boxes than banks have.

Some will be large enough to store paintings, like the two Renoirs stored away in a box by a Long Island art collector in the midtown facility.


About 10 percent of the boxes will be reserved for short term clients who want to store their valuable while they are on vacation.

Drake said the midtown location was chosen because of its proximity to the city's diamond district, several luxury hotels and corporate offices on Park Avenue.

The two other locations being studied for possible openings are both in Manhattan, one in the Wall Street area.

Drake said about 55 percent of his customers are businesses. The rest are individuals.

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