Whether you’re thinking about getting into the storage industry or you currently own a storage facility and you are looking to build more, you’re not alone. With more than 50,000 storage facilities across the United States, the chance to expand or begin your storage business is now.
But before you add more to that number, there are several factors that could potentially affect how you move forward, from population growth and green energy ideas to management options and market research tools. Check them out below — and be sure to scroll to the bottom of the post for five bonus facts!
In the “Introduction to Self Storage” document provided by the Self Storage Association, the growth patterns of self storage in the United States are analyzed. Check out these stats:
Many of the facilities that exist today were developed prior to 1979. 1978 is generally acknowledged as one of the greatest growth years in the industry.
Construction continued along the eastern coast of the United States into the 1980s and expanded into Canada, Europe, and Australia.
When the recession of the early 1990s hit, many storage facilities went into foreclosure. Some owners took advantage of this trend and purchased properties at strikingly low prices (and are now reaping the profits).
By 2009, construction of new facilities had halted almost completely.
In the meantime, the population of the United States has grown from 249.62 million in 1990 to 321.19 million in 2013. What’s more: urban areas accounted for 79.0% of the U.S. population in 2000. In 2012, that number rose to 80.7% and the increase is expected to continue.
If you’re looking in or around urban areas for storage construction, now could be a good time to break ground. If you wait several years, you could be behind the curve and your competition could beat you to the punch.
So, you’ve determined that the need for more storage in your area is prevalent. Does that mean moving your construction timeline along and meeting city guidelines and codes will be easy? Probably not.
Zac Zeune of Kram It Self Storage said in early 2014 that, despite his market of Grove City, Ohio claiming they wanted new businesses coming into the area, he felt as though he had to bend over backwards for the city (and a small village next to it) just to get permission to build his facility.
While each experience will be unique depending on the area’s building codes, this fact is something important to consider (and prepare for) as you get started. For instance, you may not want to promise a particular opening date, especially early on in the construction stages. You may also want to be fairly open to many different construction and location options so that city guidelines don’t throw a wrench in your plans.
As a new construction project, your facility has an advantage over established properties. Storage operators have become increasingly interested in green energy sources such as solar power and many are considering how they can implement it at their property. You have the ability to add them from the very beginning.
Though you’ll need to consider factors like how much sunlight your facility will receive, what kind of system you need, local and federal incentives, and how it will affect the image of your business, one of the most important considerations for solar power is cost. If photovoltaic cells cost an average of $40,000 to install on a single-family home, you can expect prices to go up from there, depending on the size and needs of your facility.
But with bad news comes plenty of good news. Along with the fact that solar power often lowers operating costs...
35% of people are willing to pay more at businesses that are environmentally friendly. So if you install solar power up front, you can potentially charge premium prices and cover the initial cost in a few years’ time.
Many neighborhoods, cities, and states offer tax credits for energy efficiency and renewable energy efforts. You can check with your local government and even earn a 30% corporate tax credit from the federal government.
Renewable energy credits allow some businesses to sell back their energy in the form of credits as states become more supportive of green energy initiatives.
The Self Storage Association is a not-for-profit organization that provides resources, annual national and state events, and education and training programs for operators in the storage industry. In their 2015 fact sheet, 95.4% of SSA direct members said they would recommend SSA membership to other owners and operators. You could be the next one to join them.
Chances are there’s an organization in your state. As of November 2015, participating SSA states (highlighted in blue below) include Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, and Wisconsin. The SSA is also internationally involved, representing facilities in Europe, Asia, Australia, Canada, Latin America, South America, and Japan.
Along with the benefits that you and your team will receive from joining your state’s Self Storage Association, don’t forget to wear your membership like a badge of honor for your customers, establishing a sense of trust and authority as they visit your website.
With the enormous size of the storage industry, it only makes sense that many organizations have conducted market research, analyzing the kinds of markets that self storage thrives in, the average amount of square footage per renter, and what demographics are most worth your time to target.
Trachte Building Systems provides these useful tidbits about the storage market on their website:
Cities with a high use of self storage include those located near military bases, universities, and resorts.
Residents without basements or garages indicated a higher usage of storage. These customers are also more likely to rent climate-controlled self storage.
The largest renter group is usually the lower income group in an area.
They also note that the northern U.S. has 5-8 square feet of storage per person, the southern US has 8-10, and Canada has 4. They claim that, “if the market you are analyzing has less, consider it further as it is currently underserved.”
Naturally, these aren’t the only statistics you’ll want to use when choosing your area. If you’re looking for more resources, head to HubSpot’s blog for 14 tools for conducting market research.
By now it should be no surprise that most consumers, across all industries, rely on the internet to find businesses and choose where to spend their money. But you may be surprised at how staggering the numbers actually are.
Search Engine Land found that, in 2012, 85% of consumers reported using the internet to find a local business. That number jumped from 79% in 2010. SEL also found that 52% of consumers base their decisions not on location or price — but rather on finding a business with positive reviews online.
What does this data mean for you? If you’re thinking about jumping into the self storage business, your web presence is critical to your success. And while there are many options out there for basic web design services, your best bet for appealing to self storage renters is to work with a company that creates websites exclusively for the storage industry. That way, you’ll be sure to get the services and functions you need to improve your business.
You’ll also want to find a company that offers SEO services, ensuring that your online listings are verified and your customers can easily leave reviews. Might I recommend a storEDGE website, which comes with unique content, detailed back-end analytics, maps verification, and a cutting edge design that’s unique to your facility? I’m betting it will match what you’re looking for.
Just like many aspects of real estate, you can own a storage facility and hire a company to manage it for you. There are many third-party management companies in the storage industry, some focusing exclusively on storage and others involved in property management in general.
The average that these companies will charge is 4 to 6% of your gross revenue while generating up to 20 to 30% more income for your facility. Why? They have experience handling storage marketing and the operational aspects of your business, eliminating much of the guesswork on your end.
Some business owners get into the storage industry eager to open a facility and then feel way over their heads as they get closer to the open date. A management company can help alleviate this stress.
There are, of course, many factors to consider. While management companies can increase your revenue, handle the aspects of business you find less interesting, and lighten your load so you can look out for your next investment, some storage consumers like renting with a storage facility that’s locally owned and operated, doing their part to boost the local economy and support their community. If that’s important to you, it may be worth the trade to hire your staff locally rather than hiring a national management company. Either way, you don’t have to be the one responsible for managing day-to-day operations.
Anytime someone builds and opens a new business, there are many complex factors involved. The world of self storage is particularly exciting to watch as needs shift, technology improves, and new ideas are introduced.
I’ve thrown tons of information your way in this article. Now tell me: What do you think? Are you considering building a storage facility? Are you new to the industry or looking to expand? I’d love to know if you found any of this information useful or surprising. And hey, if you’ve got some information for me, leave it in a comment below!
Before you go, remember those five bonus facts I promised you? I didn’t forget! Click the image below to download my extra content. The best part? It’s free!