Location, Location, Location. This is the single most crucial factor in the success of a self storage business. The majority of your rentals will come from drive-by traffic. Out of the way locations typically struggle to get customers compared to main street locations. The best properties are on a main road with an average daily traffic volume of at least 10,000 vehicles per day with a preferred average daily traffic volume of 20,000 plus vehicles per day or greater. These are often State roads. Of course, due consideration must be given to surrounding population and how much of the potential renters should be proportioned to existing or other planned self storage facilities nearby. Often you can get roadway traffic counts from The Department of Transportation.
Think retail. Would you put retail on a back road or behind another development? No and the same goes for new self-storage developments.
Unmet Self-Storage Demand is just as important as location! For a quick first total demand review, you can use 8 square feet of self storage demand per person, in a 3-mile radius. To get the unmet demand the square footage of the existing and planned self storage facilities in the 3-mile radius will need to be deducted from the total demand. For rural areas with little competition you may draw from a larger area. For large metropolitan areas of high population, the demand area may be smaller. Higher population density is often better because it is easier to have better service and out market the competition and get more of your share of renters than find renters that do not exist.
Too many people tell me they are about to build self-storage on land they own or located because self storage is needed in the area. And they are right about half the time. Not a good enough percentage to move forward with a multimillion dollar investment. In the end, new developers are going to need help to make the final decision. But you can rule out some properties with a bit of effort and determine which property in an area would be the best one to choose for a feasibility study.
First you need to determine the existing population. The population can be provided by many realtors or is often provided with many property listings. There are also several on line programs that can provide the population.
The unknown is the demand of square foot of self-storage per person. And there is not one size fits all locations correct answer since demand can and does vary from state to state and even area to area within a state. Demand in the end is not a square foot per person but rather a square foot/person where facilities reach equilibrium (90% -+ full) at acceptable rates. In other words, demand cannot be determined in a vacuum and must be used in conjunction with a review of the existing market occupancy rates and prices. Be careful not to assume full means there is a need for more facilities. Full with a regular 10 x 10-unit renting for $70 is not a good sign while 10 x 10’ renting for $160 is a great sign.
For many urban areas where there are numerous self storage facilities to choose from the draw/competition area of 3-mile radius is commonly used. And the demand of 8+_ sf per person can be used as a temporary starting point.
So, if the 3-mile population is 30,000 the total self-storage demand would be:
30,000 people x 8 sf/person = 240,000 sf of self-storage needed.
Next you need to determine the location, number and size of the existing self-storage in the 3-mile radius. Most novices underestimate the number of nearby facilities. You can use google earth pro or “google nearby” to help you find the 3-mile facilities. On google earth pro you can draw a 3-mile radius and visual search for the self storages. For a given address on a google map you can enter self-storage in the nearby tab and it will show the nearby self storages. But it does not go over town lines, so it is tricky to get all the facilities. This is considerable work to make sure you get it right but can often give you a quick count. You may be able get the existing square footages from the land records or scale from google earth pro, again a lot of work. Or you could use a real rough estimate of 50,000 sf of self-storage for each facility with a square footage check as part two of your demand study.
So, if you had 3 existing self storages in the three-mile radius you could temporarily assume that: 3 facilities x 50,000 sf/each = 150,000 sf of the existing demand has been met.
The needed demand for this case would be:
The total demand of 240,000 sf – 150,000 sf existing = + 90,000 sf. demand needed.
You would also need to subtract the demand for any facilities under construction or in the approval process.
You can see a sample mini demand study at the Storage Authority News Room
The good news is there are programs that can quickly determine the population and the existing self storages and even the square footage of the facilities, so the existing and unmet self storage demand can be determined quickly as part of a preliminary study.
One developer who recently contacted me did his own demand calculations. When I emailed him back our check of his findings with an online demand review he said “ Wow what you did in 10 minutes took me over 2 day to do by hand.”
Below is a screen shot of the Radius program we use to determine the existing self-storage demand & population. It also does a ton more, from providing the existing self storage square footage, the names of your competition and the rates of your competition.
The program is available at : https://www.unionrealtime.com/radius.html
I suggest you set up a demo with James de Gorter the co founder of Union Real time. Here is a link to set up an appointment on his calendar https://calendly.com/radiusteam/radiusdemo
This location is a 3-mile radius review for one of the FL Kmart locations closing this year. While it shows the existing self-storage is 7.36 sf per capitol (see bottom left hand side) the key is the fact that there is only 0.69 sf/person of climate control. So, this is a great location to investigate further for a big box conversion to climate control self-storage. If you want to learn more about this program or even conversions email me at marc@storageauthority.com
Of course, Storage Authority and our national brokers will help find and review your potential sites, saving you mega hours. Better yet we will even help you determine the best areas to look for land in your neighborhood.
The occupancy of the existing facilities (and their rates) can tell you a good deal about the local market demand. You should stop by a couple and call a couple to get their rates and see if they will tell you their occupancy even before you start looking for land.
In the end, there are many important factors in addition to demand so a feasibility study is highly recommended. For your planning purposes, each can cost $6,000 to $7,000. If you need preliminary assistance with your initial investigations or need a recommendation for a feasibility expert email me at marc@storageAuthority.com and I would be happy to help.
Dry flat usable land with no restrictions can typically support 10,000 to 15,000 square feet of 1 story self storage buildings per acre. I recommend you use 10,000 sf per acre before you have done your due diligence. I have not found many parcels without restrictions of one kind or another, so it is prudent to do significant due diligence to determine if a parcel of land is suitable for your needs and to determine a fair purchase price of the land.
The shape of the land, topography, wetlands, drainage, flood limits, neighbors, building design, and zoning requirements can have a significant impact on the final building square footage. Some towns, for example, only permit 50% impervious lot coverage for the buildings and pavement, other towns do not permit a new self storage within 3 miles of an existing facility. Regulated wetlands setbacks or wetland buffers often vary from 50 feet to 150 feet from the wetlands in many locations. On site storm drainage detention, if required can require a half acre or more land. High parking requirements in some towns can also limit the amount of buildings. In other words, the regulations can significantly reduce the amount self storage permitted. Often self storage is not even permitted in residential zones and other zones.
Typically, you will be looking for 4 to 5 acre or larger parcel of land with few constraints or unusual zoning restrictions for a 50,000 sf one story facility. Don’t overlook the importance of walking the entire property before you make an offer. Water, wetlands, watercourses, steep slopes, easements (overhead wires), abutting uses can sometimes be observed on a site walk. If you have a civil engineer you are working with, ask him to walk the site with you. It will be well worth his fee, especially if you do not have experience with land development.
Many self storage building manufacturers will provide a conceptual layout plan. This is a good preliminary start, but remember they often do not take into consideration all the land feature restrictions or zoning restrictions.
Early on in the due diligence process you should have the wetlands delineated on the site. Of special concern are vernal pools, special breeding areas, that often require very large buffer areas. Endangered or threatened species should also be reviewed early on.
Consider the limitations and cost of steep sloping land before making an offer. Because single story buildings are often long and because they are only 24 to 30 feet apart they require a relatively flat finish grade. Buildings can be stepped down, but only so much and this also adds to the cost. Filling or excavation on steep slopes can cost tens of thousands of dollars, sometimes more.
Once you find a parcel that appears to meets your qualifications, I highly recommend you have a local engineer do a conceptual plan for you. Ask them specifically about all the utilities, including water, sewer, drainage, and storm water detention. Make sure they tell you about any zoning regulations that may be of concern. Easy access and street views are two important items to attract more renters.
If you don’t have city sewer you will need extra land for a septic system. If you do not have city water, you will need room for a well and significant building fire walls will be required that will add substantially to the project cost.
Remember to review the local design and approval process in detail before determining the purchase option time frame. I recommend at least a 6 to 8-month option period to get your approvals, if possible. I also recommend that you include a 6-month extension clause, even if you have to pay to execute an extension. To get the extension clause approved by the land owner you might have to agree to submit site plan application to the Town by a certain date to show you are moving swiftly forward with the project.
The best sites do not always have a for sale sign on them. We are having great success finding off line parcels. Fallen down signs, friend of a friend, word of mouth, or land record research have led to best parcels. I knocked on doors. I called them and told them I was interested in buying their land and asked if we could meet. If they ask the price you are willing to pay, ask if you can walk the property to help you determine the price. It often takes two or three meetings of no’s to get to the yes. In all three cases, no one had to pay a realtor’s fee. And even better, they were purchased below market rates.
5 acres were used on this 9-acre site. The rest of the land was not usable.