23 May 2024
During the recent ISS Las Vegas World Expo, we had the opportunity to engage with industry experts, gaining insights into the current self-storage landscape. Eric Blum of BMSGRP Self-Storage Consulting shared invaluable strategies for solopreneurs and first-time self-storage investors to navigate market challenges, including rising interest rates and land costs. He emphasized the importance of understanding local market growth, competition, and insurance costs, as well as scaling projects to match market conditions.
James: We're here with Eric Blum, one of the leading experts in feasibility studies and just an industry leader. So, Eric, with all the challenges in the market right now, interest rates, land costs, what have you seen some ways that solopreneurs and people who are interested in self-storage investing as first-timers can help navigate some of the pitfalls and avoid some of the challenges to get a deal over the goal line? What have you seen?
Eric: So, one of the major things we're seeing is people understanding that land costs, location, what the market looks like. Is there still growth in that market? We're looking at tertiary markets, staying out of those major MSAs at this time, moving forward with projects, maybe not on the larger scale. Maybe we scale that down 90,000 to 85,000 gross to make the project more feasible. So, it's very important to understand your market, what the market is doing, where the growth is coming from, and what your competition is doing, where their rates are, why are their rates there, what their occupancies are, and understand their discounts as well. So, getting a full idea of your market so that you can make the wise decision. Another issue in certain markets is insurance costs. That is a major obstacle for certain areas. So, understand that before you get going as well.
James: Eric, you made a really great point about understanding your market. And my question is, what are your top three sort of bullet points or factors beyond self-storage data, beyond what Radius can show you, intrinsic or things that you look out for to help you understand your market? What are your top three?
Eric: Well, you're good. Definitely, first and foremost, you want to look at where the growth is. Are people moving to the area? Are we seeing apartments? Are we seeing single-family homes, retail coming to the area as well? Income is another one right now that you want to look at. So we're looking at that. And then the third thing is, to go with the growth, is a non-self-storage item would be where your location is. Are you on a main street? Are you hidden away in an industrial park? Because even though the internet has become a major part of our industry, still old-fashioned drive-by is still good for the product.
