ACQUIRING A PROFITABLE LOCATION
You always hear in real estate: LOCATION, LOCATION, LOCATION. Self-Storage is no different.
OVERVIEW FOR FINDING THE PERFECT SITE LOCATION
You always hear in real estate: LOCATION, LOCATION, LOCATION. Self-Storage is no different. The site-selection process is one of, if not, THE most important aspect of how well a facility will perform. Consumers do not just show up to your facility because you build it. This is NOT the “Field of Dreams”.
Let’s begin with feasibility.
Feasibility. One of the first things we do is order a feasibility study/report to answer a plethora of questions. The feasibility study is the initial litmus test for the viability of a site. It can be broken down primarily into three parts. First, we want to understand the demographic profile of the subject market. Second, the study reviews the self-storage competition in the subject market. Finally, the onsite examination evaluates the site in relationship to its specific neighborhood.
1.) Demographic Profile of the subject market
Population density and future growth projections
Renters vs Owners
Household Type (Apartments, Single Families, etc)
Household Income Levels
Per Capita Income Levels
Number of Households
2.) Competition in the subject market
Supply vs. Demand
Current Rental Rates
3.) Onsite examination
Potential Issues to anticipate during development
Demand. The reason demographics are so vital in the analysis is they provide an analytic model for what the population will demand in the specific area. The area is three to five miles from the subject property. Based upon the demographics and area, we can get an understanding of how much storage can be built or converted in an area prior to determining the size of our land or building size.
Once it is determined there is demand, the question becomes “how quickly will the lockers lease up with tenants?” – this is known as the Absorption Rate. Across the country, self-storage use is based on the amount of locker per capita. Each market has its own per capita rate. One market may have 3.5 square feet per capita, while another market three miles away can have 11 square feet per capita. The per-capita rate dictates the absorption rate due to the demographic make up and growth. The lower the per capita rate, typically the faster the absorption rate.
Zoning.It is possible, but the days of finding land or a building already zoned for storage are far and few between. Initially, we try and avoid parcels or buildings that require a “special use” permit. These permits take months to acquire. Each city has its own set of rules regulations and procedures for obtaining the required entitlements.
Traffic flow and count. Our buildings need to be free of obstructions which prevent consumers from entering. We like to have frontage roads free of medians. We are aware of the distance to the nearest intersection and traffic patterns. However, we don’t assume a parcel on a major corner is always best. The importance of physical foot traffic, or rail traffic cannot be discounted.