Selecting the correct site for a self-storage facility is the most important decision an owner has to make. Let me repeat: Selecting the correct site for a self-storage facility is the most important decision an owner has to make.

Why? Because everything else depends on it. Location will determine rental rates, occupancy rates, unit mix, how quickly you can expect to lease units, who your customers are and where they come from, who the competition is and where they are located, and when positive cash flow will occur.

This is not an overstatement. If an owner makes a poor site-selection choice, the business will surely suffer and could possibly fail. Todays self-storage customers choose facilities because of convenience and proximitysites close to their homes, shopping centers or on the way to their workplace. If a facility is off the beaten path or otherwise inconvenient, there will be no demand, rental and occupancy rates will suffer, profitability will disappear, and the end may be inevitable. Sound discouraging?

Now for the good news: Proper planning, intelligent thinking and a little research can have the opposite effect on the process and ensure success.

What Are Your Options?

There are three ways to proceed when choosing a self-storage site: You can purchase a parcel of land, use a piece of property you already own, or buy an existing building and convert it to self-storage. All three methods can be successful, but they demand researchthis is essential.

Buying land. A feasibility study will reveal the information you need to proceed with or pass on a land purchase. Regardless of the outcome, a study must be done. And if youre interested in buying new property, you should evaluate each location in terms of how it will function as a retail business, because this is precisely what self-storage has become: a retail-type operation that requires a retail-type environment.

There was a time you could put a facility almost anywhere and customers would come, but thats not so today. The business has evolved and become increasingly competitive. Owners must ask hard questions about a site before proceeding:

Without this vital information, youre rolling the dice and are destined to lose. Obviously, if the site youre considering makes the grade on all of these criteria, its not going to be cheap. Land costs continue to escalate. But if your site is right for self-storage, it will pay off in the long run with higher rental and occupancy rates and a faster return on investment.

Using existing property. Now suppose you already own a piece of land and want to turn it into a self-storage site. Once again, do your homework. Determine if the property meets all of the above-mentioned criteria. Its easy and often tempting for a landowner to try and make self-storage fit on his site rather than find a site that fits self-storage. The fact that you own a piece of land does not mean it qualifies. In fact, this is the worst reason for building a storage facility.

Converting existing buildings. The third option that has become popular in the past few years is conversion, i.e., renovating a building that was originally constructed for another purpose and converting it to self-storage. Why the sudden interest? Available land is scarce, and the cost of land keeps rising.

But there are other positive reasons to convert. Many abandoned buildings are in urban areas that are densely populated and more accessible than locations farther out of town. And these buildings are often inexpensive. Of course, getting a good deal on an existing site can sometimes mean trouble, particularly if its in poor condition and needs a lot of work. So a different set of challenges faces the owner who converts:

The cost of conversion vs. constructing a new building is contingent on the amount of work that must be done. There is no rule of thumbeach situation is different. But before you make a purchase commitment for a conversion, you must answer this important question: Would you consider building a new facility in this same spot? In other words, forget that youve found a good deal on an existing structure and ask yourself if this is a good location for self-storage.

Where Are the Best Sites?

In general, owners will be on solid ground (no pun intended) if they choose facility locations that fit into one of these categories:

Either of these location types is desirable. On occasion, a destination site will also work. This is a facility that is not visible from a major artery and has to be accessed from a secondary road. This type of site needs more marketing to make the public aware of its existence. Once customers know where the facility is, they have no trouble finding it.

The real downside of this type of location is it doesnt promote itself because prospects cant see the buildings as they are driving. We know from experience that many prospects make their self-storage decision based on drive-by sight of a facility. In addition, if nearby or contiguous land between the facility and its market is empty, the land might be sold and developed, interfering with consumer access.

The Impact of Zoning

Regardless of the site-selection method you use, theres still the issue of zoning, which can make or break a land purchase. Zoning is a local issue, which means classifications will vary from city to city. Its imperative that the owner contact the local board and find out if the property in question is classified for self-storage and if there are any restrictions on it.

Some boards are stricter than others, but issues such as setback requirements, easements for drainage, underground and overhead utilities, floor-area ratios and green requirements are commonplace and should be expected. If youre buying a new parcel, a lot of time and effort can be avoided by contacting a local real estate firm for a list of properties already zoned for self-storage. If this isnt practical, however, and you dont want to risk losing the site, consider putting an option on the property until the zoning issues are resolved.

If you own your own land or are planning to buy an existing building for conversion, check with the zoning board to see if its properly zoned. If it isnt, the process to re-zone the property can be expensive and time-consuming. In fact, some owners have had to wait a year or longer to get their properties re-classified.

Your best bet is to consult a professional such as an attorney, engineer or architect for assistance. The only exception to the zoning challenge is if you purchase land in some rural areas, it may not be subject to zoning or permit restrictions. But this is certainly the exception rather than the rule.

Site selection is critical to the success of any self-storage facility. Even if an owner does everything right in terms of the quality of the buildings purchased, the number and diversity of services offered and efficiency of operation, if the location is poor, the facility wont thrive and may not survive. Its that simple. 

Terry Campbell is the vice president of sales and marketing for BETCO Inc., a single-source manufacturer of metal self-storage buildings that has been in business since 1984. For more information, call 800.654.7813; visit www.betcoinc.com.