Let us discuss “Unit Mix” and its importance to the very start of any Self Storage Project. All too often as a salesperson I hear the following: I bought a piece of land, or I am looking at buying a piece of land that seems like it would work well for a self-storage project? The prospective client then rattles on about how every location is “full” and that they believe that their project would work in that location. The conversation then “jumps” to “What are you seeing in that area lately? Followed by “if I get you a land survey can you put together a lay-out for me? I need to get financing and would like a quote as soon as possible. Well, sure what do you want for a “Unit Mix”? Well, I thought you would tell me that?
OK, Lets hit the brakes! You are going to drop anywhere from $750,000 to $5 million on a project and you cannot tell me what you need for a “Unit Mix”? Especially for your geographic location? It is better to be smart than lucky. A combination of the two is always helpful for any entrepreneur, but no “Unit Mix”? Listen, your entire financial health of your development will flow from your blend and types of units and the velocities of revenue produced by them on a monthly and yearly basis.
There are ways to get a grasp of this one. Personal Market analysis, utilizing your competitor’s websites in a 1,3- and 5-mile radius to see who your competitors are, what units are available and what the rental prices are currently (factoring in “special 3 month move-in rates). Sparefoot.com will also be a good tool to find those. If you look at (8) locations factor in the sizes on the left and the mileage from your intended location. Gather that information, add up the sum of those prices and divide by eight. Based on that average you will not be exact, but you will have a pretty good idea of what your market is telling you. The other way is to hire one of the many Self Storage Feasibility Experts that you can find through your state self-storage association and for a fee, usually ranging anywhere from $5,000 to $7,500 get a much deeper dive into not only the above factors but overall move-in, move-out rates, segments of population new housing developments (by the way “new roofs” feed a project quite well). This may sound like a lot of money, but it may be the best and cheapest money you ever spent when it prevents you from dropping an expensive egg of a project that was not located or built correctly.
Remember, the big self-storage players have lots of people internally who specialize in everything I am referring to in this blog. You will be competing against them in some areas as well as established operators who are aware of everything I am talking about. You can be successful, but you are going up against a great deal of experience. The adage is that “wisdom comes from experience and experience usually comes from screwing up”. Not something you want to do on your first storage project.
Do yourself a favor approach a project with your Unit Mix that states what unit sizes you are looking for the number of each type of these you believe you need, their rental pricing and the monthly and yearly revenue based on the overall velocity with the assumption that it will take you 36 months (National average) to full lease-up. If your assumptions based on solid financial analysis are close to being correct, hopefully, lease-up will “out-perform’ your expectations but be reasonable in your planning.
Lastly, get with a good storage builder who has a deep resume of all the distinct types of SS that are out there. They can make suggestions. But remember one thing, it is not their job to pick your self-storage mix, it is yours. Once that project is built and completed those early decisions regarding that mix will come to light very quickly.
Forge Buliding Company work with clients to determine the best use for their property, facility and overall layout. Forge specializes in self-storage projects—both single-and multi-story. However, they will take on any steel building. Their project experience includes RV storage, car washes, airplane hangars, fish hatcheries and large warehouses. Find out more at https://forgebuildings.com
