Your Mini Demand Plus Study starts by answering these “Plus” questions:
Site Info – often provided by the listing agent
Price: Acres: Shape/any maps
Zone: Is self storage permitted in the zone
Is it on a main road? Vehicles per day if know:
Willing to subdivide if over 7 Acres?
Any know wetlands, ponds or watercourse?
Any know 100 year floodplain:
Drive by notes
· Slopes gentle or steep
· Slopes toward road or rear
· Other observations
Self Storage Demand Data – often obtained from self storage app and or from competition website or calling them
Demand Data: Provide a screen shot with radius maps & existing + pipeline sf self storage /person & population for the 2,3 & 4 mile radius. (or report provided by self storage App.)
Web price & office Price of a 10 x 10 for the 3 closest facilities: name/rate
Online self-storage data sites have changed significantly over the last year. By simply providing an address you can get the following items for a radius you choose:
· Existing facility information including: square feet of facility, both gross & net rentable sf with the net broken down in climate control and non-climate control plus year built, construction documents, satellite maps and more.
· Existing rental rates by facilities and their trending direction
· Existing competition locations shown on a street or aerial view map
· Distance to the competition
· Contact information for existing facilities
· Facilities in the pipeline
· Demographic information
· Zoning data
· Drive time maps
· And more
But before you pay for demand related data Google and the property for sale listing can provide information that may make the site un feasible so they are a good starting place to compile data.
A Google search of the competition is simple:
1) Enter the address in google
2) Click on google maps
3) In the upper left-hand corner click on nearby and enter self-storage
Then a map of the nearby self-storages will appear on the right and their website listings on the left. You can review distances and your sites accessibility compared to the other locations. And then check rates and availability of units by calling the 5 nearby websites and looking at their websites you can a pretty idea of local rental rates and occupancies. In the end you are not only looking to fill up quickly but at premium rates.
While you are on google maps you can go to the arial view and zoom in to see if there are any observable wetlands, ponds, watercourse, utility lines or other items that may reduce the usable land.
www.radiusplus.com and www.Stortrack.com are two website you can use as a part of your initial demand review. Both provide single site reports that provide the demand data but no opinion if the location is good or bad. The Radius Plus does have a plan where you can obtain the data at significantly less than paying for a report each time if you are willing to do it yourself. They will give you a tour of the site and I have outlined some of the basics below.
If you purchase a report and have questions send me a copy at firstname.lastname@example.org and I will be happy to provide guidance.
Without enough unmet demand to fill a facility or for locations where the rental rates are too low (one sign of over built areas) there is no point in moving forward with additional time consuming research.
Too many people tell me they want to build self-storage on land they own or have 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. Typically, lack of enough demand is due to limited population or too much existing and proposed pipeline self storage.
Smart developers are going to get help to make the final decision including a feasibility study by an expert and a concept plan based upon local zoning regulations. But most developers will save time and money by doing their own mini demand and feasibility study first. A full feasibility study cost $6,000 to $10,000. Now you can do a 2 hour mini study and if things are looking good spend a couple of hours reviewing the zoning regulations (either yourself or your local civil engineer) and even prepare a concept plan to review with the Town before you make an offer on the land. Typically, your offer is accepted before you pay for a third party full feasibility study.
Basic Steps to Review Self Storage Demand on Radius:
a) Buy credits – note 1 credit = 1 hour on the site but if you sign off in less than an hour you lose balance of credit/hour. Presently you get 5 free credits when you sign up.
b) Click on location and enter a street address in location box – when your address pops up you will need to click on it. If the property does not have an address use an adjacent property address.
c) Check to see the site location on the map is correct.
d) Click on Trade Area (on left side) and site data will appear to the right.
e) Choose you radius to check demand in – typically starts with 3 miles.
f) Click on and take screen shots of the map and data on the right-hand side, including existing self-storage and proposed self-storage in the pipeline (and total of both) and the population. Note this data is shown in square footage and sf/person)
g) Share with us for input.
Determine the area of competition for review
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. For large metropolitan areas with high population, the demand area will be smaller. Higher population density areas are often better because it is easier to provide over the top service and features, so you can out market the competition and get more of your share of renters, than to find renters that do not exist. In rural areas you can even use a 5 mile radius but areas with less than 15,000 people in the 3 mile radius should be reviewed with caution.
Self-storage demand per person.
There is not a one size fits all number for every location since demand can and does vary from state to state and even area to area within a state. As a starting point I may start by using 8 sf of self-storage as equilibrium. In other words, you want the square footage of the existing square footage, plus the self-storage in the pipeline, plus your proposed square footage to be 8 sf/person or even less to provide a buffer. It is extremely important to note that 8 sf/person equilibrium is used as a starting point to compare one area to another and must be refined on experience for any given area. I have seen feasibility studies that approve sites even with over 10 sf of person when there is a high population. Before I built at 10 sf/person I would have to check out several factors. Some of the existing facilities maybe outdated, very small, or in bad locations and are not competition for a new modern facility.
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 a regular 10 x 10’ renting for $130 plus would be a positive indicator in many locations.
Demand calculations are simple using an online service that provides the population and the existing self-storage square footage. But the hard part is to know is the competition radius and what square footage of existing self-storage per person is reasonable in your area for absorption of new units are premium rates.
Typically, you would enter an address and the self-storage data website would provide a 3-mile radius map with all the existing and pipeline facilities along with the population. Some even provide the square footage of the existing facility and the existing self-storage sf/person. This is a nice feature that allows you to quickly see if an area is saturated with existing self-storage. Again, the tougher part of the equation is how much sf storage per person is needed. I see a lot of experts use a range from 6 to 10 sf. I recently saw a feasibility study that approved a site that had 13.7 sf of self-storage per person in the 3-mile radius. Until I look into details of a specific area I use 8 sf/person of the total sf as equilibrium point.
Radis Plus map with Data
Demand Calculation Example: Your goal is to build 50,000 sf self-storage facility. You plug in an address for a three-mile radius and you get:
· Population = 30,000 people
· Existing self-storage = 143,000 sf and 143,000 sf/30,000 people = 4.77 existing self-storage per sf/person
· Proposed self-storage in Pipeline =0 sf
· And assuming 8 sf/person of self-storage is the maximum goal of sf/person, including your facility.
Your demand calculations would be as follows:
30,000 people x 8 sf/person = 240,000 sf total self-storage equilibrium/demand needed.
240,000 sf needed – 143,000sf existing = 97,000 sf unmet demand
Or (8 – 4.77 sf/person) x 30,000 = 97,000 sf unmet demand
If there were no other facilities in the pipeline I would consider this an acceptable location to consider building a 50,000 sf with a demand buffer and review the several other factors required for a good location. But if in this example 65,000 sf were in the pipeline that would significantly change things as the total existing and proposed storage would be 6.93 sf per person
(8 - 6.93 sf/person) x 30,000 = 32,000 sf of unmet demand.
Or 97,000 sf unmet demand – 65,000 sf in pipeline = 32,000 sf unmet demand.
Unless other factors can overrule our 8sf/person (including your facility) goal this site would be unacceptable with the 30,000 sf in the pipeline.
I had a very similar 3-mile review for one of the Florida Kmart locations closing. The existing self-storage was 7.36 sf per person leaving little room for future development. But when the climate control vs the non-climate control was reviewed there was only 0.69 sf/person of climate control. So, this additional information, makes this location worth further investigate for a big box conversion to climate control self-storage, due to the lack of climate control units in the area.
It is important to checkout each facility as I have found that the existing and pipeline facilities square footage sometimes can be removed because they are outside parking or outside RV spaces or even pipeline facilities that have been abandoned so you need to personally check the 3-mile competition area.
The online storage data websites are also great to help you determine where to look for land. Since you can see all the self-storages you can look for areas with fewer facilities and locations or search areas with higher rental rates that may be better locations than other areas to concentrate you land searches. On Radius Plus you can also drag the three-mile radius from location to location in your area and get instantaneous readings on 3-mile (or a radius of your choosing) for population, sf of existing/pipeline self-storage and existing/pipeline self-storage/person to help you find areas of low self-storage densities to concentrate your land search.
You can even use the demand review when looking at an existing facility for sale to help you better understand the possibilities of you renting up the facility at higher rental rates
What is missing from the above review is any financial feasibility calculations. These take significant amount of research and work and often provided by a third party feasibility expert. But at this juncture several assumptions should be confirmed that will tend to lean toward positive financial rewards. Such as: 6 Acres of usable land for under $900,000, 60,000 – 70,000 sf net rentable single story facility, cash equity available to build & for carrying cost to break even and your facility average rental rates can be $1.2/sf/month minimum and preferable higher.
In conclusion online, self-storage data sites are fantastic time savers and make the initial demand review process much faster. They should only be used as a starting place and not used to make a final decision as things can change rapidly and the data is based upon certain limiting factors. They help save you a ton of time and are best used to compare sites and to initially determine which sites are worth further research by you and your experts.
If you have more questions about developing your self storage a good place to continue your research are the 12 Storage Authority Franchise FAQ’s that get right to the point.
If you want to get more information on the Storage Authority Franchise opportunity, please provide your contact info here: storageauthorityfranchise.com/opportunity1/
Marc Goodin is President of Storage Authority LLC. www.StorageAuthorityFranchise.com He owns 3 self-storages he designed, built and manages. He has been helping others in the self-storage industry for over 25 years. He can be reached at marc@StorageAuthority.com or directly at 860-830-6764 to answerer your self-storage franchise, development, marketing, sales and operational questions.