While we continue to love secondary markets for all things self storage, we can’t forget that those in the most densely populated cities need self storage more than ever before. Choosing an urban location is a big decision for the self storage business owner or operator, which could result in riches just as quickly as it could result in ruin. For the time being, self storage is still a fantastic investment, especially in places like New York or San Francisco, where space is at a premium. Let’s get a bit deeper into the nuts and bolts of what to expect when you make the decision to own a storage facility in one of the most densely populated cities or areas in the United States.
One of the issues you can expect to run into is that large parcels of land are almost nonexistent in urban cities. If you are lucky enough to find one, you will also find that it has an appropriately large price tag to go with it. You might need to go for a far smaller plot of land for your build, but that doesn’t mean you are restricted. An article entitled “Multi-Story, Maybe Mixed-Use: How to Make the Most of a Little Urban Plot for Self-Storage,” ISS contributor Stephen Overcash says,
"...Urban sites command higher land prices, driving self-storage developers to seek smaller parcels than they would in suburban and rural locations. The question is, how can you achieve the density necessary to serve the market and make profit while creating an architecturally sensitive facility that meets local design requirements?”
Just as land is sold at a premium in more urban cities, construction costs can quickly soar if you don’t watch carefully. It’s often a good idea to go with local construction companies with experience in the self storage arena, but again, you will pay for this experience. To ensure that you are getting the most for your money, keep careful track of any zoning or code issues that you might run into when building multi-story buildings. If you surpass the local “high-rise construction codes” you will end up paying much more than you bargained for, considering the ancillary codes governing high-rise mechanical systems, fire exits and ratings and even plumbing.
In urban areas, you must remember you are sharing space with both workers and local residents, who may have an opinion about the way your facility affects their quality of life. Remember, a single rental community has the power to make up 70% of your customer base as a self storage business owner. There are an increasing number of instances of a local community rising up and demanding that a new self storage development meet certain guidelines, or even stop the build altogether. It’s smart to look at the local community and even meet with leaders and decision makers in your area, to ensure that you don’t step or stomp on too many neighbors’ toes as you build, and after you are up and running.
While we’ve hit on the complex parking situation in several of our articles, we are going to hit on it again! Parking isn’t easy in most urban areas, forcing many business owners to get creative when offering parking to self storage facility renters. When building or buying in a densely populated city, take some time to map out a parking strategy that includes loading zones, long-term and short-term parking. Ultimately, you want to be sure you don’t build a huge beautiful building, only to find that customers have no way to reach it with their cars, vans or moving trucks.
On a recent business trip to New York, I set out to visit several self storage facilities in lower Manhattan. I was unable to find ANY of the facilities I was hoping to visit, due to an extreme lack of signage at street level. Now imagine I was moving and arrived in the area with a truck or car load of boxes. It would be a disaster.
The self storage industry has relied on visibility since its inception, and today is no different even with the advent of Google and Apple maps and the “near me” search function. If you are lucky enough to get a lot with visibility from a major highway or thoroughfare, good work! If not (and this is likely the majority), you need to closely consider what visibility your self storage business has from street-level. Make sure that you have clear signage that is visible from the street, and don’t skimp on signage that tells people where to park, load, enter or exit.
One of the greatest benefits of starting your self storage business in an urban area is the opportunity to build partnerships with local businesses that offer ancillary services like moving trucks and helpers, moving supplies like boxes or tape, or even partnerships with local security companies to monitor your site after hours. The owners of these businesses all live and work in the same community, and local goodwill will ultimately be the difference between success and failure - even in the most densely populated cities or areas.
Did you know that crime in urban areas is between 29-42% higher than in rural areas? This means you must plan for security from the jump. Building in an urban area means you will be spending more on security features like CCTV, gates, door locks and fire alarms - it’s just the name of the game. Many self-storage facilities even choose to employ security guards for both day and nighttime, to ensure customers and their goods are safe and secure while at your facility.
It’s critical that you plan out your facility with Americans with Disabilities in mind. Find data related to your local population and take the time to look up local ADA statutes to ensure that you aren’t missing out on any opportunities. For example, while most people associate the word “disability” with wheelchair use, only a small percentage of Americans with disabilities use wheelchairs. Read everything you can on accessibility for those with sight, hearing, mobility, or mental disabilities and plan accordingly! A great place to start is reading up on the Americans with Disabilities Act, which became law in 1990. Your local community will thank you.
When deciding what type of units to build in your new self storage business or facility, you need to consider what your local market will be storing. Urban areas have vastly different needs than more rural areas. For example, you are far more likely to get renters who want to store specialty things like wine, art, cars and bicycles. A few of the most common specialty units include:
It’s smart to incorporate specialty storage areas at your facility to take advantage of this vastly underserved market. Elevated bike racks are great space savers, while climate controlled units are going to be important for those storing more costly items. In short, don’t short yourself by adding too many of the wrong sized units, or by neglecting the needs of those with larger or more expensive storage needs.
Yes, big cities are paved with proverbial gold for self-storage business owners and operators, but only with the right planning and a clear purpose. Do you research before deciding to enter the market in the most densely populated cities in the United States, to ensure you are ready for whatever comes your way. For more information on local demographics for any area, visit us at Radius+!
