Self Storage- Will they come? Market size?

[Henry Clark]

@P from prior topic, use this to understand the capacity in your market and your best options.  Never go with one offer.  They have the power.  Work in several towns and once and be prepared to make several options with one week time limits on them.  You then have the power.  You are prepared to walk away from a deal.

Not going to give you the answer (maybe if you were Army or Air Force) LOL, but here is the approach.  At the end you will come up with a ratio.  There is already per sq ft metrics out there.  This one you will develop.  Understand it. And most importantly own it.  Once you get your ratio, track me down and we should have about the same ratio (x/100 population).  This should take you two weekends or three days to complete.

Market Demand- “Will they come?”

I'll give you the tool I use, but you will have to make an investment of your own time. Otherwise you don't own the data.

Step 1 "Capacity":
Count the units and sizes in that market. Get headcount by googling the town or zip code. Be aware if the town is standalone, or it might have a large population outside since it is a suburban community to a larger town nearby. Add those people in by using County or School area population.

Example:
Town 1:
#of units/headcount= 300 units in the area/ population 3,000= 10 units per 100 people.

Town 2:
500 4,000= 12.5 per 100
Town 3:
and so on.

Do every stand alone town in a 60 mile radius, or until your satisfied. You will get a High, Low and a average. I have a certain ratio per 100 headcount (not households, not age, not sex) I use when deciding to buy or build in a town. You will get to the same answer I have.

Luckily we are all the same. Death, divorce, fire, home sale, floods, layoffs, etc. No matter whether your Rich or poor, city or country folk. The ratio above works anywhere.


Step 2 "Existing":
In each town count the number of units by size. When I do my ratio I assume all units are the same. Count the 10/15/20's. Any smaller units just make them equivalents of a 10 x15. 3 5 x 10's= 1 unit

Although I am counting them all as the same, the reason, I say count by size is for when you build.

Now lets calculate "Demand":
Number of units needed (Step 1) minus Number of units existing (Step 2) = Quantity to build.

Town 1:
500 - 400 = 100

Town 2:
300 - 100 = 200

Town 3:
and so on.

This will help you pick which town you have the greatest potential for success. "Subject" to other factors that is where you want to either buy or build first. You only need to do the above once. I have kept this ratio in my head since the first time and make all my decisions using it, before I move into a market. If your in a large city, use this ratio. Pick the zip codes in your territory.

Many exceptions to the above.
a. My town has the highest per 100 count around by far, and I am still building. There are reasons.
b. I just built in a town that was not the best of the ratios. But the largest facility with 1/2 the business is 4 miles out of town by themselves.
c. There is a town that is Fully Saturated. No extra unit will ever be rented in it. I would love to build there. Everyone built 10 x 20's for some reason and they did it at the south end of town where the zoning is easiest. I can build halfway to the population who is in the Northend of town and I would hone in on 10's and 15's with some 20's. Everyone thinks they have less than they have. They will rent 10's or 15's first.
d. We are building our last location. Your eyes never stop looking. The best spot I have seen is a cornfield where you can't see a single house. Would loved to have built that one.

You don't know me.
1. Own the data yourself. Don't have me give you the figure. Question the logic, “all of us are the same”.
2. We are in 5 towns, 8 locations. Most are in towns of 5,000 or less. We are in Phase 1 rent up stage in our first large city location (630) and in building stage across town (330).

I have used this tool for all of the Buyouts or build outs above. "Put your money where your mouth is."


Ad Hoc- Traffic counts
Two locations, one with 70,000 Vehicles per day and one with 15,000 per day. Both in the same general area. I picked the 15,000; why? Learn the nuances. Start small and make your mistakes then.

Don’t trust me. Own the info, it’s your money. Everything in the Storage business can be validated.

[Henry Clark]

@Wade Wisner   We use a ratio of 6 units (10/15/20 depth) for 100 people and not households; as average.  Anything below that we are comfortable investing in.  Our home town is about 11/100 and me and my major competitor are still building.  Do your ratios for each market areas.  For big cities, narrow down to about a 2 mile radius.  Then you compare locations against each other.  6/100; 3/100; 10/100; etc.  The lower the ratio, the more underserved the market.  Greater chance for success versus another location.  We will rank 3 or 4 locations.  Then based on zoning access go after the location with the greatest potential first.

On google earth count the doors.  At the ends of the buildings as I posted above, count the ribs which are in 1 foot increments.  30 rib wide building is a 30 footer.  If you get serious about an are, then you drive it.  Need to understand customer traffic flow, neighbors, street access.

Since you already own a location and know the market.  Do the same analysis on that market.  Determine the strength of your existing location.  The harder from a zoning, land availability and pricing it is to get a lot, the better the asset or location is.

Tourism-  I would say no impact, to greater demand.  You don't have to have a hard answer.  Do the overall analysis.  Add buildings as needed and you get to know the market.  I looked at a market like Reno.  You have the town itself and nearby rec areas.  It had more inventory and demand than a normal town.