Self Storage Unit Development

[Frank Manning]

I am looking at a piece of land that I want to develop 8,000 sqft of self storage units. I'm early in the due diligence process  but I have identified an off market property and have let the seller know I am interested in buying. He is waiting for my offer before he lists the property.

In my feasibility study, I am using a model that assumes there's a demand for 7-8 sqft per person in the area. I am using radius's of 5-7 miles to get the population. 

There is a small population (6,900 w/in 5 miles) around the property. The problem is that there is a large 120,000 sqft facility 3 miles away and about 28k in other facilities near by. The odd thing is that the large facility is charging only $50/ month for a 10x20 unit, whereas the 28k in other facilities are charging closer to industry norms at $140/month. 

All the units in the area are full, which indicates there is some demand at least during the busy season. 

I am struggling figure out how I should think about this property. The smaller units are obviously able to get fair prices and stay full, but my model shows there is a surplus of 49K in sqft right now. 

Anyone have advice on this? Or on developing self storage in small towns?

Thanks

[Zach Quick]

@Frank Manning There are feasibility experts that you can have run a study for you to get a third party opinion. Even if they say no, it's probably a cheaper investment than breaking ground on a bad project.