Revenue from self-storage properties rakes in $39 billion annually, according to analysts Sparefoot.
The self-storage business has proven durable even in recent months. Despite the COVID-19 pandemic, people have remained in need of storage, and in some cases, have been on the move. Online bookings, virtual tours, and self-service kiosks have all helped sustain the profitability of the self-storage industry during this difficult period.
But before you buy or pursue the construction of a self-storage facility, you should consider several factors that may impact your business plan.
In the following article, we’ll discuss some key factors that may impact how you prepare for your entrance into the self-storage market, including some of the latest self-storage industry trends.
Scrutinize Your Plan
The metro areas of Portland, New York, and Nashville led the nation in planned or under construction self-storage facilities in 2019.
These are all areas where rents are high, housing stock is tight, and people are moving. But they are also places where zoning regulations are plentiful.
This isn’t necessarily a bad thing as it has had its own impact on self-storage industry trends. In fact, it turns out people seem willing to pay more for units that have a better design. Units that are handicap accessible, sufficient lighting, and curb appeal also do well. So, don’t get upset if your area has more rigid standards for new construction than you had anticipated.
To benefit from these self-storage trends, it is advisable to invest in a proven architect for the area. Try to find someone who knows the zoning requirements and land use prohibitions. Zoning approvals are a rigorous process. So, the extra money you’ll spend on design and planning should pay off. Remember, the ultimate goal is approval and greater customer satisfaction.
You don’t want expenditures to balloon as you redesign or stretch on in lawyer’s fees as you fight for approval.
Self-storage Industry Financing
With the political climate changing, banking and financing could see a shift also. Small Business Administration loans have allowed investors to pony up as little as 10% have seen a further interest rate reduction. A good omen for those considering an investment in the storage segment.
However, some industry analysts don’t predict these low rates to last forever. As more players enter the self-storage market, financing scrutiny could intensify. Moving quickly on financing while interest rates are at historic lows is advisable; particularly in the self-storage market.
What’s more, in the United States, as we have demonstrated above, the self-storage industry has carried thriving despite the current COVID-19 pandemic. So, the self-storage industry is alive and well and there are plenty of reasons why you should not consider an investment in self-storage whether it is as an owner or as a shareholder.
Technology Feeds Satisfaction
From management software to mobile customer portals, technology can cut down on overhead. It’s best to take a hard look at what’s out there and determine what features you plan to integrate on the front end of your business plan. In other words, technology should be part of the plan, but do not let it be the sole influencer of your decision-making.
However, remember that you’ll want to have several security features at your self-storage facility; these bits of technology are of course necessary. Cameras, keyless entries, automatic gates, and key cards are all recommended features. These security features not only allow you to protect your property but give your storage renters greater peace of mind when they come and use their self-storage space.
From a marketing perspective though, technology can be a huge asset to your self-storage space. For example, having a website on which potential customers can enquire about units can raise awareness in your business and it can be a great way of advertising the services you provide. Whilst posting news about your company on social media platforms can help spread the word and effectively put your storage facility on the map for renters. Even though these are not necessarily must-haves they do greatly contribute to driving customers towards self-storage companies and can be seen as a way of creating demand for your services.
One interesting self-storage industry trend is drive-up, climate-controlled units. This merges the customer’s desire for a climate-controlled unit with convenience. Customers enjoy backing right up to their unit. They also enjoy eschewing the need for elevators and stairs. The main reason behind this trend is that drive-up self-storage facilities make it easier for the customer to carry bulky or heavy items they want to store up to their units. From an owner’s perspective, this type of storage facility also makes sense because they present fewer health and safety risks than more conventional storage spaces.
Your Business Plan
While the self-storage industry has seen steady growth, its profitability depends on your preparation. Research how your business will run. There are many factors to take into account from the type of self-storage units to the demand in the area and many other market drivers that can make your business flourish. These should of course be included in the content of the business for your self-storage facility.
However, you must also make sure the business plan covers any market restraints. These should be addressed in the executive summary and can include things such as government regulations. Including potential barriers in your plan will make you and your investors more aware of them so you can anticipate any extra cost they might generate or find a way around them to maximize demand. Don’t present it as something negative but as a business growth generator if you have a plan around it. For example strict planning regulation on new buildings can force you to make creative use of the space you chose to attract customers.
On top of this, there are other questions you must answer before making a foray into the self-storage industry. These will help determine what your company profile might look like and what market opportunities are out there for you.
Do you want to hire a full-time or part-time manager? Will you invest more of your time in the day-to-day planning and operation of your self-storage company? Or is investing in shares of a cooperative venture more to your liking?
Before you invest, make sure to answer these questions before starting the process. It will help in your decision-making, and provide direction to your business.
Do you want more information on planning for success in the self-storage industry? Contact us today for more information