By Chris Hitler
This year has seen an active market for self-storage acquisitions. Interest rates are at historic lows, and buyers and sellers are coming together on price. If you're interested in acquiring an existing self-storage facility, here are five factors to consider as you evaluate a particular opportunity.
The single most important attribute of a self-storage facility will always be its location. Although the Internet has substantially changed the way facilities are marketed to and evaluated by prospective tenants, it cannot correct a bad site position.
The ideal location is at a city center on the corner of two important cross streets, where vehicles can see and access the facility from both directions. Unfortunately, zoning and other city-planning approvals make this type of location nearly impossible for storage, but it's still critical to understand these aspirations. When evaluating a potential location, here are few questions to ask:
- How visible is the site? Is it easily seen by drive-by traffic or tucked far from view?
- How many cars pass the location each day?
- How easy is the access? Can you turn into the facility from the main thoroughfare, or does entry require navigation through side streets?
- How effective is the facility’s signage? Can information be easily read from a moving vehicle?
As you evaluate your target’s location, also assess it relative to the competition. Although 10,000 cars may pass by the facility each day, if a competitor sees 15,000 per day, you'll likely have to work harder and spend more advertising dollars to generate the same amount of new business.
In addition, understand how your target facility’s rental pricing and unit mix compare to the competition. Do competing facilities charge more or less? Do they have more or fewer unit sizes and types, for example climate-controlled, conventional, outdoor, etc.?
Check the amenities the facility offers such as security cameras, an office/showroom, the manager’s apartment, access gates, etc. Carefully inspect the property to determine whether the current owner has been keeping up with repairs or the facility has some deferred maintenance.