Investing in constructing Self-storage facilities is an important decision with many considerations. Historically, there were zoning restrictions that prohibited growth in certain prime locations. With changing regulations and unprecedented growth in the industry causing at or near 100% capacity for many facilities, some owners are choosing construction for continued growth. Here are five things to consider when planning a construction project for your facility.
- Site Selection. Find the right location with the proper market. Consider sourcing multiple options to ensure suitable selection and opportunity. Also study visibility; can people see the business and know that is a viable option? Is it easy to access from the main roads? Is it close to a densely populated area?
- Feasibility study. Understanding your potential market and cash flow opportunity is key in a construction project. Here you are trying to verify that the selected location is correct and also determine the amount of storage and product mix. What are the market’s current rental and occupancy rates? Take a look at other facilities in the area and research their policies and products. Using an independent third party that is emotionally unattached to the project is recommended.
- Financing. The changing economy offers new opportunities in Self-Storage financing. Banks, like Live Oak, are able to offer financing for construction. Lenders will be looking for items such as a description of spending/use of proceeds, Current profit/loss statement and balance sheet dated within 90 days, as well as the past three years’ business tax returns, if the business is already in operation.
- Construction Team. Determine the team for your construction project. This includes a contractor, site planning engineer, building supplier, architect and project manager (likely you). Build a team of people you trust to bring your project to completion. If possible use a team that knows the self-storage industry.
- Management. The expectations of a Self-Storage manager are high. Acting as a facility manager, marketer and customer service manager are lofty goals for anyone. Decide if you will be an owner operator or if you will hire a third party management company. Each of these options have benefits and considering them fully will ensure your business runs smoothly.