Challenges Ahead Sign

Overcoming Common Self-Storage Development Hurdles: Guidelines for Site Selection, Project Planning and More

Developing a new self-storage facility comes with challenges, but they can be overcome through careful and efficient planning. Here are some guidelines on site selection, project planning and budgeting to help owners and developers conquer the trials of building.

By Benjamin Burkhart

“It costs more and takes longer” is a fairly common sentiment among real estate developers. Obstacles to development, whether in finding the best sites or in planning and building the right project, slow the process and are hard on the bottom line.

Self-storage developers face unique challenges. Unattractive and outdated facilities pepper towns of all sizes nationwide. Terms like “mini-warehouse” or “discount storage” on signs next to eyesores with rickety gates, gravel driveways and overgrown weeds present inherent difficulties to the developer trying to build a modern-age storage property.

While there will always be development hurdles, these can be overcome through careful and efficient planning. From selecting the right parcel of land to watching your budget, here are some guidelines to help you surmount the trials that often come with building a new self-storage facility.

Choosing the Right Site

Self-storage has become a “darling” asset that’s reasonably viewed as having some resistance to economic recession. The potential to generate passive income with few employees while outsourcing competitive operations management makes the industry attractive to investors everywhere, and rightfully so. However, many think just about any parcel of empty land will do for a new development, and that’s simply not the case. You want to avoid oversaturated markets, sites that are too costly for a new build, or ones that come with zoning headaches.

One method you can use to target a site is geographic information system (GIS) analysis. By taking a macro look at a broad market, you can quickly identify pockets of competitor concentration, recent growth trends, forecasted growth, traffic patterns and zoning information. GIS provides a strong visual analysis of a broad market, allowing a developer to see the data that’s important to him.

Self-Storage Feasibility Grid 1***  Self-Storage Feasibility Grid 2*** 

For example, the purple graphic shows a geography north of Houston. The darker shades represent the areas with the highest forecasted growth by number of households. The green graphic shows the same geography but reflects median household income. The colored dots represent existing self-storage competitors. Such an analysis can provide a strong starting point for site selection.

Local real estate brokers will usually tell you, with genuine sincerity, that they understand what’s required for developing self-storage. However, unless they specialize in the industry, few truly comprehend it. Providing a high-level market analysis and targeted search strategy will create an efficient platform for vetting sites. Even if your broker isn’t the expert he thinks he is, you’ll be able to guide his search by directing him to target micro-markets with potential.

You want to target sites that have quality access and visibility as well as those that allow for storage development per zoning and local building codes. A site that isn’t visible to a favorable traffic pattern, isn’t convenient to the population or is undersized might be forced to compete on rental rates alone. That’s not a good plan for long-term investment.

If your suburban market demands 500 units, you probably need more than an acre, unless you can justify multi-story construction. You need parking for at least six cars and a moving truck at any one time. You want comfortable access for tenants, signage that’s bright, fresh and visible to local traffic, and curb appeal that’s inviting. You’ll also want an obvious office location that’s easily recognizable as the place to conduct business.

Ideally, you’d like some distance between you and the nearest competitor. However, if the competition is weak, perhaps a “better mousetrap” will perform well. Zoning often forces self-storage sites into clusters. If you have to build within view of other facilities, be sure your vision includes competitive upgrades to attract prospective renters.

Planning Your Project

Once you’ve moved from site selection into planning phase, more obstacles may arise. Zoning, code interpretation and busy professionals can slow the process. Plan for it and get ahead of it with the right team.

There’s sometimes hesitation or a desire to short-cut the concept stage of development. However, your vision should include renderings complete with landscaping, signage elevations and bird’s-eye views. Your design team (often an engineer and architect) can help guide the project so it suits local codes and ordinances. Environmental issues, green-space requirements, long-term community development, out-parcels, right-of-ways, setbacks and traffic flow must all be identified and clearly defined.

It’s difficult to get a variance or favorable interpretation of codes if your ideas aren’t apparent to everyone looking at your plans. “Self-storage” or “high-end personal storage” doesn’t carry the same connotation with everyone. Spend the money to cast the vision correctly from the start. Hire an architect to create pretty pictures. Be willing to commit to the appropriate efforts from concept to final submittals and avoid ambiguity.

Planning your new site will take several months, even if you’re laser-focused. If you don’t know the answers, have people around who can provide guidance. As the leader of your development project, you’ll avoid a lot of obstacles by making sure you have team members who can answer questions when they arise.

Of course, politics often burden the self-storage developer. Know the political landscape surrounding your project and talk openly with the people who can have administrative influence over it. Your development team should have clear understanding of the approval process and set out a strategy for moving through it.

Working the Budget

Now, the budget. Here’s where many new to the industry struggle the most. Again, it’s critical to have a plan, and don’t make decisions on the fly. There’s much more to development costs than most people think, and a lot has changed since the last self-storage construction boom. Be prepared with adequate financing for hurdles and changing requirements. What’s reasonable? Below are some budget ranges and timelines for an average-sized project.

Self-Storage Project Budget Ranges***

There are also other items to include in your budget, such as rezoning. This varies among markets, but you want to add 25 percent to 50 percent to your total predevelopment costs. Understand the reasonable timeframe in your specific market.

You’ll also want to budget at least $2 per square foot of gross-building square footage for miscellaneous expenses. With changing energy and fire codes, $3 to $5 per square foot might be a better estimate.

The above ranges make sense but may not apply to your specific market or site. Averages only help you set reasonable expectations for your budget. Do your homework to answer all questions and identify costs of all line items on the front side of your project to avoid surprise items that become necessities down the road.

Much new development is on the horizon. Being efficient in site selection and planning your new project will help you find and create better self-storage assets that will enable your investment to achieve the best return.

Benjamin Burkhart is owner of BKB Properties in Powhatan, Va. As a consultant to the self-storage industry, he specializes in feasibility studies, acquisition due-diligence and loan-package preparation. He can be reached at 804.598.8742 or [email protected]. For more information, visit

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