Self Storage Feasibility - What Am I Missing?

[Ross McFarland]

In the somewhat early stages of research for self storage in a few towns near me. I've analyzed 7 cities but I'm now really focusing on one city (25,000pop) and it's sister city (1,700pop). The smaller "sister city" is 5 minutes down the road to the west and has zero self storage. They are commonly considered to be the same area because everyone from the smaller city must travel to the larger one for groceries, shopping, and and education higher than elementary school. I worked as a firefighter in this city for a little while so I'm fairly familiar with the layout, demographics, etc.

Competition

All of the self storage currently built in this town is on the far east side, sandwiched between the only major highway and all of the population. It also happens to all be clustered together, one right next to the other, 4 locations in total (though two of these locations are the same REIT).

The two locations that are the same REIT don't have total unit numbers available online, but based on what can be seen from aerial imagery combined with their website saying "X number of units left" or "sold out", these locations are pretty full. The county also has financial assessments available publicly for these locations and their 2023 report numbers appear pretty full when I cross-reference the units visible on aerial images with them.

The third location, another popular REIT in this area, is entirely climate controlled. Same story here. Each unit has less than 3 left or are completely full (based on their website and county financial assessments). I would not be competing with them as this is my first venture.

The last location is the only "mom and pop" in town. It's built behind their primary business, but it is pretty large for a mom and pop. It has the most drive up units at one single location than anyone else.

All of these locations are built out and can no longer expand. They are locked in between one another, the street, and the railroad. This makes me wonder how storage in the area will be able to keep up with increasing demand as the city grows.

Demand

While I have used some of the "market analysis" tools found on the internet, I have thoroughly enjoyed reading posts and replies from Henry Clark. Using his post "Will They Come?" I did some calculations to determine demand. Please correct me if I should be validating in another way.

With both cities having a combined population of roughly 26,700 people, there should be around 1,602 units to be considered "saturated" by this standard. At the current date, there are 1,323 units give or take a few.

This means at the current moment the area is 279 units "short".

What really makes me think this area is viable for additional storage is the growth. This area is growing fast. A large intermodal alongside huge warehouses has accelerated the development in these two cities in the last couple of years. A new apartment complex was built late last year with 288 units, and there are currently nine other large residential developments confirmed by the city to be under construction. I have seen a couple of these locations already being built out. Many of them are apartments. Almost all of these are in what I would consider to be the "west side" of town (the area of my proposed location). Future zoning maps created by the city confirm at least nine more large residential developments being planned on the west side as well.

Location

While location isn't exactly what this post is about, building on the west side of town will put me towards the residential developments being built now and in the near future. This area also has a very finite amount of zoning available for self storage. I see this as a win provided I can grab some of it because it will make it harder for competition to get between me and the population growth on this side of town.

What's the catch?

As the post title says, what am I missing? I see good potential here to build alongside a growing community, but I want to make sure I'm not falling victim to confirmation bias.