08 Apr 2022
Through both good and bad economic times, the self-storage sector has proven to be a steady performer. Many have even dubbed the self-storage industry to be considered recession resilient. This is why many investors are still diving in and staking their claim. To get in on the action, you can either buy an existing self-storage facility or develop a new one. Successfully constructing a self-storage facility involves a multitude of factors, including choosing the right site, creating a design with layout, developing the best unit mix, and deciding on which contractor you want to partner with for this adventure. This may all sound simple, right? Well, not so fast. Let’s zoom into some of the details and discuss how the fundamentals will provide optimal results.
Just as with any investment endeavor, the ultimate goal is financial success. When developing commercial self-storage, the best way to accomplish that is to carefully plan the basics: site selection, unit mix, and site layout. For many, the industry business model may look simple: buy land, build, and make money. And the truth is that in the beginning, it may have been that simple, but today, it’s more complex.
The self-storage industry, as with many similar industries, is experiencing greater competition, steeper land costs, increased building material prices, as well as additional regulatory burdens. Interestingly, the self-storage industry has begun to see a higher demand for climate-controlled and multi-story buildings. Both result in a higher expensive to develop, with a longer lease-to-stabilization time. However, they continue to be a solid investment choice for many markets.
Let’s jump into three fundamental factors that contribute to a self-storage facility resulting in financial success. These apply to the first-time developer, as well as those that have been in the game for some time. Everybody should take into consideration these basics.
Site selection is one of the most critical factors in planning for the success of a self-storage facility. Studies have shown that 75% of self-storage customers live within 2 miles. Also, keep in mind that customers are likely to choose a facility where they don’t have to cross an impeding barrier (e.g. a busy thoroughfare). Below are some additional key points to consider when looking for that ideal location.
When you have found an ideal site location it is time to design the layout. It is critical to make the very most out of every square foot. If the space isn’t being rented, then it isn’t making money. Creating efficiency is key. So, where do you start? Well, you will want to partner with an experienced drafter/designer that specializes in self-storage facilities.
Self-storage unit mix is normally a product of population density, medium age, and income levels. It is key to understand the market in which you are building the self-storage facilities in. Basically, you are wanting to build a profile of those that are most likely to rent and what is that is important to them.
This truly is the million-dollar question that everybody wants to know right off the bat; however, there’s not a simple answer. The hard and soft costs of construction will vary from project to project. Let’s break it down.
At Forge Building Company, we partner with investors and developers on their self-storage projects. We have over 15 years of experience in this space and will provide all the necessary information needed for your project to be a success. We’ll come up beside you and walk with you from start to finish.
Melissa Anderson has over 20 years of experience in the Construction Industry and provides insight to those ready to build their brand-new self-storage facility or expand an existing one. With an astute understanding of the self-storage industry, she assists both the seasoned investor, as well as those who are just beginning their journey with the construction of their self-storage project. For more information, reach out to her at manderson@forgebuildings.com or at 208-629-2952.
