How to Build a Self Storage Facility

The goal of any investment is future financial success. The same goals and principals can be applied when it comes to investing in a self-storage development project. The basics are simple: site selection, unit mix and layout.

Many markets are experiencing greater competition, higher land and building costs, and additional regulatory burdens. We’re seeing the use of more climate-controlled and multi-story buildings, due in part to trends in consumer demand. As a result, self-storage facilities are becoming much more expensive to develop, with longer lease-to-stabilization times. Even so, investing in self storage facilities continues to be a solid choice.

Site Selection

Determining where to build a self storage facility is the most important factor in future success. Generally, you’ll want to find a location that is highly visible, with easy access, on a well-trafficked road. The site should be in a high-growth area, or an area that is trending that direction. n addition, you need a good combination of demographics, with higher than average household income and population growth in a three-mile trade area. Finally, the location should have minimal existing or planned self-storage competition, particularly within that first mile.

Obviously any time one develops industrial property, the property must be large enough for the planned development. In addition, it must have access to the proper utilities such as water, sewer, and electricity.

Typically, a single-story development might require 3 to 5 acres, depending on topography and shape. A multi-story site will come in at 2 acres or so. Always have an exit strategy for any site you choose, with the ability to terminate the contract if the permitting or zoning doesn’t go your way. The bottom line is that finding the right site for your self storage facility will go a long way in the success of the business.

Unit Mix

Having the proper unit mix in a self storage development project is a product of population density and income levels. For example, areas of higher income will typically demand more security and climate-controlled features; apartment dwellers will want smaller units, say 5-by-10s; and suburban or commercial-oriented markets will call for more large spaces, such as 10-by-20s.

When developing a self storage facility, especially in Central Texas, keep in mind your financial return per square foot. This rate typically decreases as the size of the unit increases. For example, if you are able to charge $70/month for a 5×10 unit, you are getting a financial return of roughly $16.80 per square foot. It is unlikely, however, that you will be able to see the same return for a 10×20 unit. This doesn’t mean you should build smaller units, it is simply something to factor into considerations based on your location, population density, and demographics.

Site Layout

To discuss site layout, let’s focus on single-story, as it would normally be easier and less costly for a first-time developer to build. During the layout process, we typically involve a professional civil engineer with experience in self-storage design, which can be invaluable. The goal is to maximize the net rentable square footage. You need a site that’ll accommodate a minimum of 50,000 square feet, constructed all at once or in phases.

When determining the layout of the storage facility, factor in how many climate-controlled vs non-climate controlled units you’ll be able to fit within the site. Then ensure ease of access is accessible for all customers, from all entrances, to all units. If tenants are not able to easily drive to, unload, and reach their storage unit, they are likely to go elsewhere.

Starting Costs and Financing

Kicking off a self-storage business comes with hefty initial costs, including buying land, building the facility, and covering unexpected expenses that might crop up. It’s crucial for commercial developers to sift through a range of funding sources, whether it’s securing loans from financial institutions, partnering with investors, or exploring new-age funding methods like crowdfunding.

This critical financial groundwork sets the stage for the project, determining its economic feasibility and success potential. Moreover, having a clear understanding of the comprehensive financial landscape, including operational and promotional expenditures, is essential to crafting a budget that supports the project’s sustainability and growth prospects.

Market Research Importance

A successful self-storage facility is built on the back of detailed market research and feasibility analysis. Diving deep into the specifics of the local demographic, such as income brackets and growth trajectories, as well as conducting a thorough evaluation of the competitive scene, is fundamental.

This exhaustive exploration aids in making informed choices about the facility’s positioning, the diversity and dimensions of storage offerings, and crafting marketing tactics that resonate with the target clientele. Additionally, delving into market insights allows developers to tailor their services to better meet consumer demands, ensuring a competitive stance in the bustling self-storage market.

Business Plan Development

Developing a comprehensive business plan is critical for navigating the complexities associated with launching and running a self-storage operation. This document should encapsulate the business’s vision and mission, project financial outcomes, and detail marketing strategies aimed at drawing in customers.

This business plan serves multiple purposes. It acts as a strategic guide and helps you make decisions about operations and finding ways to grow. It also plays a crucial role in spotlighting potential hurdles and strategizing on risk mitigation. This ensures the business remains agile and prosperous in an ever-evolving market landscape. Essentially, a robust business plan is indispensable and acts as a linchpin for strategic decision-making and promoting a proactive approach to business management and expansion.

Operational Considerations

Efficiently managing a self-storage facility requires a blend of hands-on oversight and technological support. Whether opting for self-management or engaging a third-party company, the integration of management software streamlines operations, enhances customer service, and optimizes financial performance.

Marketing and Management

Effective marketing is key to attracting customers to a new self-storage facility. Digital marketing strategies, including SEO and online marketplaces, complement traditional methods to increase visibility and drive occupancy. Coupled with robust management practices, these strategies contribute to achieving and maintaining high occupancy rates, ensuring customer satisfaction and financial stability.

Zoning and Regulatory Challenges

Navigating zoning and regulatory hurdles is a significant aspect of developing a self-storage facility. Developers must proactively engage with local authorities and the community to obtain necessary permits and approvals. Strategic planning and legal guidance can mitigate these challenges, preventing potential delays and ensuring compliance with all regulatory requirements.

Casey Development, Ltd: Self Storage Facility Developers in Texas

In order to get the most return for your investment when it comes to developing a self storage facility, you need to find the right site, the right unit mix, and the right site layout based on the market. The expert team at Casey Development, Ltd. has been helping investors find the best locations in the hottest markets in which to build their self storage facilities. Contact us today to learn how we can help you get started with your storage facility development.