STORAGE LOCATION “SITE” SELECTION:
You have already performed the market analysis based on the earlier discussion of “Will they come?” and have learned how to analyze a town and its “Demand needs”. Now we will search for a “location” to Build out or Buy. Its preferable to Buy since this is the quickest and known cash flow. You also start to have more control over the pricing in that area. Building is usually better from a Marketing standpoint, because you can build it for the customer, versus most mom/pop locations are built because they had extra space where they were already at. We are only looking at Drive up storage and not Climate Controlled buildings. 80% of all Storage owners are individuals and most do Drive up Storage.
Reminder as an example for town selection:
(Existing units) (Unit market size) (Demand need)
Town 1 500 650 150
Town 2 1000 1000 0
Town 3 1800 3600 1800
Now I’m not going to make this easy for you. The obvious town above would be 3, but we wouldn’t learn much if the “numbers” were the only parameter. Then Town 1 and then Town 2 would be our selections.
Steps to select a site within a town:
A. Get the zoning ordinances or a zoning cross reference table.
B. Look at the zoning map.
C. Get a copy or look at the Planned Development map. For future zoning changes.
D. Do Google search, Self Storage Town name. Click on the Map.
- Look for the “Holes” in the town coverage, where there are less Storage Locations.
- Look where the most population live.
- Compare the Zoning map and the Planned Development map against the two items above.
E. Pull up “Sparefoot”, select the Map. Do the same comparison as D above.
F. Look for a location that is near a cross road or has two way turn through lanes or traffic light at its intersection. You want easy access for your customers on and off the front road.
G. If you see a site where there are already 5 National REIT Climate Controlled chains built side by side, and you can find a piece of land next to them, where the numbers work, build next (????) to them. Make sure you understand how you will compete against them.
Town 3:
Reviewing the ordinances, they only allow 60 foot long buildings with every 20 feet being offset forward or back from the next one. They all require brick or stone facade. Plus you have to have footings and hard surface drive ways. We might buy an existing location here if the numbers are right, but there are other towns where our entry point is less expensive and we will make more money. Yes, the above ordinances exist in a town I have researched. We won’t do the rest of the Site selection process on this town.
Town 1:
Everything looks good. We can build traditional buildings with no hard surface driveways, no footings required and no facades. Zoning allows Self Storage in I3, I2, I1 special use, C2 special use. We can find 1 ½ acres of land where we can put 120 units on, and the numbers work.
Town 2:
Why even look at Town 2, the numbers say they will never need another storage unit.
- The largest competitor has 400 units and is 4 miles out of town by their selves, away from the population.
- All of the existing Storage locations are all built out. No extra land to build on. Being mostly mom/pop they will not add a second location.
- Most of the Industrial zoning and storage units are in the South end of town and the population is at the north end of town.
- “PC” Planned Community zoning allows Self Storage with a Special/Conditional Use permit. There is land half way between the South Storage and the population areas.
- “A” Agriculture zoning allows Self Storage with Special use. This used to be an Agriculture community with no Commercial or Industrial needs, so they allowed these projects outside the normal City limits. The far larger town next to it has over run it, causing this towns population to swell. But this town has never gone back and updated their zoning plans. We can build at the North edge of the population.
- Everyone in the south built all 40 foot wide buildings which means they generally have 10 x 20 units or 15/25 or 10/30 combinations.
- Also Phase 1, if you have enough land only takes 65% occupancy to break even, which covers the principal/Interest payment, without depreciation expense or income tax considerations. You can get to 85% and be making good cash flow plus paying off the facility. Yes, these situations exist.
Summary:
I may come back to Town 1 and 3 in the future, but my greatest potential for success will be in Town 2. Town 3 has the greatest Demand need, but this fits the REIT climate control product better than a Drive up location. We don't want to compete against them on that type of product. They have better Financing and SEO power.
Depending on the Site in Town 2, we can build more units than Town 1; up to 300 to 500 units depending on the size of the site. Our major building configurations will be 30 foot wide buildings, so we compete with a 15/15 or 10/20 unit configuration. Competitively, we will be far closer to the population and we will have smaller size units that will be less expensive. Everyone thinks they have less to store than they do, and they always want the lower price. They will end up renting two 10 x 15’s after they fill the first one up.
If you get a chance, read the “Zoning I-3 right?” and the “Will they come?” posts. If you decide to do Self Storage grab a copy of the excel file for “Self Storage Startup Checklist 101” and the “Build out Cost template”. With the above you have 90% of all you need to be successful, most of the rest is “just do it” experiences, that won’t burn you to bad.
As always, “Start small and make your Big Mistakes early”. ClarkstorageLLC. Thanks.
