How do you determine the size of your self-storage market?

Every market in every part of the country is going to be different. You may find that your market changes from city to city even when they are just across the river from each other. You don’t want to invest in a market that is oversaturated. You don’t want to invest in an area where the population is leaving. Because of this, it is so important that you determine the size of your market before you invest.

In order to do this, the first thing that you need to do is pull a demographics report within three miles of the property you are considering investing in. 70% of our customers store within 3 miles of their home. Obviously if you are in a more rural area you might need to go out 5 miles and if you are in a crowded urban area, you may only go a few blocks.

If you went 3 miles in Manhattan, you would end up in New Jersey and there is no way that someone is going across state lines to store with you. You need to keep that in mind when you are pulling your demographic report. Is there some kind of natural boundary that might change your report? Is there a large river where people may want to stay on their side of the river? Are you close to a state line or city line? If 3 miles puts you in another town, stop because people usually want to stay in their own town when they are storing.

Start by looking at your density in that area. How many people pulled up in that area. If you have a ridiculously high number, your area is too big, bring it in closer. Another important factor to consider is your competition. Where is your first competitor? If you have a competitor in that first mile, stop. There is no reason that someone is going to drive past one location to get to yours unless there is a huge rate difference, and you don’t want to be the low rate. If you only find one competitor in the first three miles, you may need to go out a little further to find out where your market ends.

An easy way to find your competition is to go to Google Earth; you may need to use Google Earth Pro to find some that Google Earth missed. Now do a search for self-storage and your city. This will map out all the self-storage in your city. Now you can draw a ring around the facility that you are considering. How many facilities are in that circle? If there are a lot, that is definitely something to consider, but it means that you need to make your circle smaller and smaller.

Now that you have identified your competition you need to evaluate each self-storage facility individually. How old are they? What kind of condition are they in? How well are they maintained? What amenities do they offer? Are they easy to access? Finally, what are their rates? How big a competitor are they going to be to your facility?

While this may seem like busy work, it is critical to know before making an offer. There may be extenuating factors that have kept the current owners from being successful. You don’t want to buy a headache; you want to buy an opportunity. As always, happy investing.