The One Hour Self Storage Preliminary Demand Review
By Marc Goodin 1/2017
Demand is one of the several items that must be reviewed to determine if a property is suitable for a new self storage development. It is important not to over assign to much importance to Demand or any one of the item or any one the important site features. This preliminary demand is not a substitute for a Feasibility Study by a self storage expert but rather a quick way to determine if further research and if a full demand analysis should be completed by experts.
Demand is typically measured based upon the existing population in 1 and 3-mile radius in the Urban areas and the 1, 3 and 5-mile radius in rural areas. Typically, a combination of square foot per person is determined based upon individual State averages, National averages and micro averages, existing rental rates and occupancies. Many experts use the state average of 8.3 sf per person as a starting point. And add and subtract based upon local conditions and features. Additional demand may be added if there is a large commercial base that may use storage or subtract demand if poor rates or large vacancies exist.
Once the total demand is calculated the available demand for construction is determined by subtracting the demand used by the existing competition, plus competition under design, approved, or under construction
This used demand is again based upon the square footage of the existing competition.
These are quick down and dirty calculations. If they look favorable, then it is time to get the actual square footage of each facility (often available at the city records and often online) and confirm with the city if any facilities have been approved or even submitted for approval. There is no excuse for not driving the area to assist in your research. Once the calculations are performed with the more accurate data look favorable and you have confirmed the site has the other characteristics of a good self storage location it is time to get a professional feasibility study done.
Example 1 – Urban Location
1 Mile Radius- Existing Population 22,000 people
Total Demand available = 22,000 x 8.3 sf/person = 176,000 square feet
Demand used by 1 Existing self storages of 62,000 square feet
New Construction Available Demand = Total Demand available – Demand used =
176,000 sf – 62,000 = 114,000 sf available for new construction –
Looks good for additional research
3 Mile Radius – Existing Population 86,000 people
Total Demand available = 86,000 x 8.3 sf/person = 713,800 SF
Demand used by 9 Existing self storages, assuming an average size of 60,000 sf = 9 x 60,000 = 540,000 sf
New Construction Available Demand = Total Demand available – Demand used = 713,800 sf – 540,000 = 173,800 sf available for new construction –
Looks good for additional research
Example 2 Rural Location
1 Mile Radius- Existing Population 3,000 people
Total Demand available = 3,000 x 8.3 sf/person = 24,900 square feet
Demand used by 0 Existing self storages = 0 Square feet
New Construction Available Demand = Total Demand available – Demand used = 24,000sf – 0 sf = 24,900 available for new construction
Not enough population available in 1-mile radius but in conclusive since typical in rural low population areas.
5 Mile Radius – Existing Population 15,000 people
Total Demand available = 15,000 x 8.3 sf/person = 124,500 sf
Demand used by 1 Existing self storages = 55,000 sf
New Construction Available Demand = Total Demand available – Demand used = 124,500sf – 55,000 sf = 69,500 sf available for new construction
Looks good for additional research. I should note, among other things, I often like to see a demand needed that is double what is to be built.
Example 3 – Self Storage Opened In 2016 In Sarasota FL
Let’s take a look at a facility that opened in 2016 on Route 41 in Sarasota, FL and see if we come up with the same conclusion to build a new 3 story facility as the owner did.
The two items we need are the population stats and near by self storages for the 1 mile and 3-mile radius.
To do this I used programs from PAC-COMM http://pac-comm.biz. If your business has interest in self storage acquisition, location feasibility studies, facility research for future development, or any type of self storage location research; PAC-COMM’s Google Mapping API provides an important service.
PAC-COMM offers free two and three-day trial periods for accessing and exploring both their demographic reporting and their mapping applications. To learn more about the demographic reporting and the mapping applications download this PDF: http://freepdfhosting.com/d11807d40f.pdf . To reserve your test trial, ask additional application or licensing questions, contact Teresa Roemer at PAC-COMM, troemer@pac- comm.biz. Let them know Marc from Storage Authority sent you.
I simply plugged in the address into the PAC-COMM demand URL form and got the demographic and population report and the existing facilities in the area. Here are the results of the population section of the demographic report.
Next I entered the address and radius into the self storage mapping program. The program permits for several different radius options and you can click on each facility to get the name & address to assist in further research. Here are the results for the 1 mile & 3 mile facilities.
As you can see there are two existing self storages in the 1 mile radius.
As you can see there are 9 self storages in the 3-mile radius.
You can zoom in and out and also get an Arial views, as well as choose other radius to help with your research. You can also click on each facility to get the name & address to assist in further research.
For the quick and dirty calculations, I assumed all self storages are shown and the ones shown are self storages (vs RV only storages), and I simple estimated the square footages by my experience of driving by or looking at them at google earth. I also assumed no new facilities are on the drawing boards, have been approved or are under construction in the 3-mile radius.
1 Mile Radius- Existing Population 9,504 people
Total Demand available = 9,504 x 8.3 sf/person = 78,883 square feet
Demand used by 2 existing self storages of approx. 25,000 sf and 70,000 sf for a total of 95,000 Square feet (estimated)
New Construction Available Demand = Total Demand available – Demand used = 78,833 – 95,000 sf = negative 16,167 sf for new construction
3 Mile Radius – Existing Population 60,844 people
Demand available = 60,844 x 8.3 sf/person = 505,000 sf
Demand used by 9 Existing self storages consisting of and estimated 450,000 sf
New Construction Available demand = Total Demand available – Demand used = 505,000sf – 450,000sf = 50,000 sf
Based upon these numbers you may consider this to be an A location based upon demand. But since I live around the corner and know the area well, my initial reaction would be this is a great location and dig deeper. I would first get the actual square footages of the existing facilities and check their occupancy and rental rates.
In certain areas driving habits and drive times must be considered. This location has an advantage as Route 41 is THE major road in town and many people head to this road to shop and access the town north and south. Making this location a shorter travel time and more often taken route leading prospects to this location vs. other locations that may be closer to home mileage wise.
The closest self storage is a haul dealer with inside multi story self storage that is not air-conditioned that concentrates on truck rental and not will not be a major competitor. And did you notice there is a long stretch to the north on 41 with facilities. Also this area has a high commercial and retail storages that will also provide 15% plus of the renters.
Secondly did you notice how 5 of the 9 self storages are located just on the 3-mile line? If we did a 2.9-mile radius the numbers we would have almost the same population and less than half the self storages. Likewise, if we added area to the west we would not add any self storages but add substantial traffic.
For this location around 40% of the 3-mile radius has no population due to be located next to the ocean. Which is not the case for the 5 facilities at the three-mile radius. I would visit these self storages and I bet they are both full at great rates. If we go to the 5-mile radius we are not going to add any facilities to the west and the facilities to the north have a natural break at Fruitville Avenue where people to the south of Fruitville Avenue would have the tendency to go south due the better neighborhoods and shopping districts.
I would normally have to do a host of further research to determine if this site has the demand and other features to determine if this location is suitable for self storage. And my guess is many professionals would have stopped their research early on and skipped this site, but in this case we have the evidence this is a superior location.
Our newest addition to our Storage Authority Team (to help you) is Garrett Boyd who was the manager of this facility for its first 6 months of operations, before he joined Storage Authority. In just six months under Garrett’s management this new 3 story facility went from opening to over 60% full. This is an incredible feat! Of course we believe and give much of the credit to Garrett due to his superior self storage sales and marketing expertise.
This bring me to one very important fact over looked by most self storages. If a manager is a simple order taker/clerk or even a good customer service agent an A location can rent as a C location. A superior experiences sales and marketing self storage manager can literally garnish much more than their fair share of the demand.
You owe it to yourself to contact Garrett at 941-928-1354 or Garrett@StorageAuthority.com to learn more about the Storage Authority Franchise opportunity. www.StorageAuthorityFranchise.com
Marc Goodin is President of Storage Authority Franchising. He owns 3 self storages he designed, built and manages. He has been helping others in the self storage industry for over 25 years. He can be reached at marc@StorageAuthority.com or directly at 860-830-6764 to answerer your development, marketing, sales and operations questions. His best selling self storage books are available at Amazon and here.