Determining the Density of Your Market Area

Now that you know what your market area is and what your competition looks like, you need to look at the surrounding area’s population. If there aren’t enough people in your area, then you won’t be able to keep your self-storage facility full.

The easiest way to go this is to go to a website like www.easidemographics.com. There are a lot of websites that can generate demographic reports, this is just one of them. There are three demographic profiles that you need to pull. Start by putting in the address of the property that you are considering. Now you are going to request a professional report. This report is only a few pages long. You don’t need a 50 page report at this time. You will get that with your feasibility study later.

Right now, you are looking at the current growth and the projected growth over the next 5 years. You also want to know the density of the population. Finally, you need to know what the income levels are of the surrounding homes. You want to know both the household income and the per-capita income because these will help you to determine what size storage units you want to build if you are building.

From the standpoint of who is going to rent self-storage units, we don’t care about race, nationality, or gender. They all rent. The only time that age matters is if you have a very young population. They typically have not had time to acquire a lot of belongings. On the other hand, if the population is much older, they may have trailers and boats to store in addition to all of their extra belongings. This may make a difference if you are considering Boat and RV Storage.

Now that you have that information, let’s evaluate it. Is the area declining? If everyone is leaving that area, who is going to store with you? Make sure that you watch for areas that are shrinking because you don’t want to get stuck with a facility that you can’t rent or sell. Typical, stable population growth is between 2% and 5%. Avoid ghost towns.

Now we are going to look at density. If there is a very low population density, that means that you are looking at a rural location where there are large lots, probably farms. People who have 10 acres of land, don’t usually nee to store their belongings, they have plenty of land to do that themselves. If they do need to store, they need large units.

If you are in a high density area, they you are probably looking at people who are in apartments or condos. They are typically looking for smaller units to rent. Usually in urban areas, they are looking for something that is around a 5x5.

Now you need to evaluate the household income? Can they afford a self-storage facility? If they make less than $35,000 a year, they don’t have enough money to be able to afford self-storage. In this case, you do not want to build a lot of more expensive to rent, climate controlled units.

The demographic report helps you to build to your market. This means that you will have the right size units and the right kind of units. You don’t want to build a facility that is the wrong mix for your area. Take the time to pull the demographics report and study it so that you know if you are looking at a good investment. As always, happy investing.