When the storage industry was at its peak, you could use tilt-up concrete, masonry block, clay tile roofs or clear-span modular systems and still be able to recover the additional costs. In today’s market, the numbers simply don’t pencil out anymore.
Our proverbial paradigm hasn’t just shifted, it’s standing out on a ledge threatening to jump and take cap rates with it. The economy has changed, our industry has changed, and the storage market has definitely changed.
So what are your options? Stop developing and hope things turn around before it’s too late? Continue to look for that perfect acquisition with great potential but is not ridiculously overpriced? Take your money and do something else with it, like the stock market, finances or real estate? Or, find less expensive sites and build more cost-efficient buildings that will still create profitable facilities?
If you weren’t a risk-taker and true entrepreneur, you most likely wouldn’t be in the self-storage business. Before the boom, one of the admired traits of an entrepreneur was the ability to spot changes in the market and quickly adjust to take full advantage. Maybe it’s time for a correction in our industry, the consequential elimination of the weak and survival of the strong. What you do from this point on is what really counts.
Can We Talk?
To quote one of my favorite philosophers, Yogi Berra, “You’ve got to be very careful if you don’t know where you are going, because you might not get there.” Based on that, here are some recommendations on getting back to the basics of building a successful self-storage facility.