Instead of reacting to a self-storage site presented to you by a broker, consider this: Have you first gone out and proactively researched the market to decide where you want to be located?
If you know your market well, you may have instinctively decided where you want to be geographically. Those who own facilities in a particular market can see exactly where existing customers are coming from through a ZIP code printout of customers from management-software programs.
But if you’re entering a new market, perhaps you should consider a more methodical approach to site acquisition. You or your real estate advisor should prepare a market survey of the particular city or county in which you’re interested.
The best way to begin is by dividing a market into geographical units. You’ll need to examine several factors including political delineation of towns, villages and cities, and physical characteristics such as rivers and expressways.
Next, do a rental survey to determine the size of competitors; what their rental rates are; who is discounting; and other meaningful management issues. Review the demographic makeup of a sample of sites within each geographic area already configured.
Finally, prepare a sample market and economic feasibility study of a few areas to determine the viability of a new project within each. My company recently used this process to make recommendations to a client about where to build or acquire sites within an area.
The process was completed within a six- to eight-week period and gave the client the necessary base information to determine if he wanted to enter that market. If you were going to enter the self-storage business or expand into new territory, what kind of research would you do to satisfy yourself, your banker, partners or employer before you recommended committing the time, effort and dollars?
Nick Malagisi is the managing director of Sperry Van Ness/Storage Realty and national director of self-storage for Sperry Van Ness Commercial Real Estate Advisors. He is based in Buffalo, N.Y., where he leads the company's national self-storage team.