Determining Your Real Estate Market

Storage facilities are same like multifamily is if you're building one out of the ground, you have to make sure that it's going to work in that area. If you're buying an existing one, you probably have some metrics to know whether or not it's already working right and that’s based on cash flow and occupancy. Maybe there's some operational inefficiencies, maybe it's under market rent, things like that. But you have a pretty good predictor of what future cash flows will look like based on what current occupancy looks like, so a little bit more speculative coming out of the ground. You really just have to understand why you're in that geographic location. Why are you building there? What's the absorption rate going to look like? Feasibility studies, those are huge, you have to spend a lot of time and lot of money.

The next project that we're doing is almost $12 million just in cost, so we're spending a lot of money. We want to make sure that the locations are going to work, but the benefits and the upside and the efficiencies that you create by building brand new is you have a class A building. It's all-new updated lighting, all the modern amenities and at the same time, you're creating a ton of value coming out of the ground. So you know the value that you get to create as you lease these things up based on your cost per square foot to build new. It just makes a lot of sense if it's in the right geographic.

Storage facilities are not that different than what people are typically looking for in other commercial investments where you want to be in an path of growth. You want to be able to see a systemic growth, whether that be in population size, job diversity or job growth. The market that we are investing in, Orlando has all three of those indicators. So we're building three in Orlando and around Orlando with the second fastest growing city in the country is dictated by Forbes for the last three years running. So the number one for job growth and job diversity. So Orlando has done a fantastic job of growing and it means that there's a lot more people moving into the area and it means that there's a lot more demand. Nowadays one in 10 people have a storage unit, so if your population is growing and more people are moving into that city, then 10% of that city is going to need storage. So now you need to start looking for the locations. So in terms of demographics, not that much different than what you're looking for a typical commercial real estate project. Ask yourself, is it growing, is there job diversity? Is there good demographics in terms of growth? How do you build the land? These are very important questions when you are looking to pick your market for building and investing.

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