To avoid building in a market that has already surpassed its demand, conduct a feasibility study or hire someone to do it for you. You can use census material to obtain information about the one-, three- and five-mile radius surrounding the proposed site. This data should include current population, anticipated growth, population mix (renter/owner, multi/single family) and average income. Most of this valuable information can be found at your local planning department.
You should also know your current and potential competition. Both existing and planned competitors should be plotted on your map. It’s also a good idea to conduct onsite visits to all the competition. Have a conversation with facility managers to determine the unit mix, rental rate and occupancy level, which will help you assess market saturation and calculate income potential.
Following your onsite visits, determine the total number of square footage as well as the actual number of units for the existing self-storage in the area. Traditionally, a market has been thought to be saturated when two to four square feet of rentable space exists per person, depending on the neighborhood population, housing and commercial mix. But because the amount of storage per capita can vary wildly from one market to another, there’s no formal answer to the question of market saturation in self-storage. Some markets can support eight to 10 square feet per capita. The Sunbelt states, for example, where people tend to own more leisure and recreational equipment, can generally absorb larger amounts of storage.
The type of housing also affects how much storage a market can accommodate. For instance, if you’re planning to build in an area where the majority of homes have basements, enclosed garages and large closets, your target market may not need as much storage as one that has a high density of condominium and apartment complexes or no-frills single-family homes that are often found on military bases. The age of the population, mobility rate, employment status and income are other important measures.
Once you've determined the target market has sufficient demand for more storage, you'll want to consider the availability of land. When investigating specific parcels, keep the following in mind:
- Appropriate zoning
- Commuter traffic patterns
- Visibility from the road
- Ease of access
- Proximity and density of potential customers
- Current storage saturation level (competition)
- Expected growth for the area