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Entering the Self-Storage Market: 8 Questions to Ask Before You Build

By AJ Osborne Comments
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As the self-storage real estate market tightens and acquisitions become harder to find at the right price, many owners and investors are looking at new development. This can be overwhelming, especially for someone new to the industry. Building comes with many challenges, but the first is to understand market demand and the right product to fill it.

The self-storage industry is evolving. It’s becoming more competitive, and larger operators have scaling advantages. The business is also progressing to accommodate changing consumer needs, views and expectations. Before jumping in, here are some questions you need to ask yourself. 

1. How are you going to attract new customers?

You may not realize it, but you’ll have two “locations” to manage. The first is your physical property. The second is your online presence. In many ways, the Internet has surpassed other methods for attracting new tenants. The importance of your facility’s Web presence can’t be understated.

In our highly competitive industry environment, you must have a great presence online and off.

Population density and traffic count are large indicators of whether your new venture will be successful. Focus on a three-mile radius around your facility, as this is where you’ll attract a majority of your customers.  

2. How will you serve new customers?

The operation you put in place and the manager in charge of your facility will create your customer experience. Your facility must be easy to access and provide services your target market requires. Online payments, 24-hour access, security, conference rooms, Wi-Fi, RV dumps, climate control, unit lighting, and an easy-to-navigate entrance and exit are just a few of the many services that need to be addressed when designing a competitive product. 

3. What are your options for ingress and egress?

High traffic is a main goal, but ease of entrance and exit can be a major issue for you and your customers. Make sure your driveways and parking accommodate incoming and outgoing traffic. You’ll need more parking during your fill-up phase than when your facility becomes stabilized. 

4. What’s your value proposition?

Your services, location—online and offline—staffing, quality and unique unit sizes will all go into your value proposition. Look at how your development will differentiate itself in the market. The self-storage industry must be approached as an active business, not a passive real estate investment. It needs to have many of the qualities that retail companies strive to achieve.

Your facility must be enticing to new customers, and it needs to look and feel welcoming, safe and efficient both physically and operationally. The build of your store must coincide and reflect the operation of your business. Think about the customers’ needs and how they’ll use your product. This will dictate how you build your property.

As the industry grows and customers are more familiar with self-storage services, their needs and wants are becoming more diverse. They expect more product options as well as more services to come with those options.

If you’re trying to capture the demand for RV units, for example, you need to build with that in mind. If your facility is going to have plentiful outdoor and indoor parking, the size of the lanes is critical. If they aren’t wide enough, it can be too difficult to get in and out of the property. This can also lead to damage to your buildings. It’s vital you think about these details as you design your facility.  

5. Are you going to offer climate control?

If you’re focusing on climate-controlled units, look hard at what tenants are storing and consider any other accommodations that should be made. Many tenants are using climate-controlled units for specific reasons such as collectibles and medical inventory.  

6. Who’s your target market, and why do they need your product?

Climate control, outdoor parking and unit size can vary greatly depending on your market and population density. Make sure you build a product that’s not only right for your market but won’t contribute to oversaturation.  

7. Are you looking to attract businesses?

Catering to specific tenants can be a profitable strategy if the demand is there. Look at the industries in your area and their storage needs. Many contract workers need a place to store their inventory and supplies. Others may need a place to conduct business. 

8. Are there ancillary services that can make your facility more valuable?

Try to offer your tenants something your competitors aren’t! Before you build, go to the market and test it. The best way to analyze your market and competitors is to obtain a feasibility study. It’s important it’s done by someone who’s familiar with the storage industry and the unique challenges that come with it. Also, get out and visit the facilities around your proposed site to see what’s already being offered. How will your facility and services fit in the market?

When deciding to build, first look to the consumers’ needs and the business operational needs not your own. Understanding your market is the first step to long-term success.  

AJ Osborne has more than 15 years of experience in the self-storage industry. In 2012, he co-founded Bitterroot Holdings, a privately held company that owns and operates Keylock Storage as well as fitness centers. Keylock has 10 location across the Northwest, with plans to acquire or develop five more within the next five years. For more information, visit www.bitterrootholdings.com.

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