Whether you're interested in starting a brand new self storage business or thinking about expanding your existing self storage company to a new location, doing your homework is essential. In part one of this three-part series, we'll explore several of the most important factors to consider before breaking ground on a new self storage facility.
Supply Growth Trends and Your Self Storage Business
When we talk about supply growth trends within the self storage industry, we're essentially talking about the age-old concept of supply and demand. Simply put, as the supply of self storage units increases in any given region, demand can be expected to decrease. Along with decreasing demand comes falling prices and more lucrative customer incentives-both of which eat into your bottom line.
Of course, this is economics 101, and it probably doesn't come as much of a surprise to you. What you might find surprising, however, is the number of well-intentioned entrepreneurs who fail to study supply growth trends before venturing into a new market. The operative word here is "trends." Put another way, if you're thinking about starting a self storage business in a new region, you'll want to understand where supply is heading-not just where it is right now.
Oversupply: Good for Consumers, Bad for You
Let's take a closer look at this concept as it pertains to the Omaha region. According to Yardi, a leading real estate investment company, the Omaha self storage development pipeline is projected to bring 22 new self storage facilities to the area, or an additional 850,000 square feet of rentable space. It all adds up to a nearly 25% increase in supply for this particular market by the end of 2018.
Take Omaha out of the equation. Would you choose to start a new self storage business (or expand your existing business) into any market that was estimated to see such a profound increase in supply? All things being equal, probably not. Instead, most self storage owners would prefer to explore other geographical locations where the supply/demand curve is more favorable.
Self Storage Business Tips Part 2: Barriers to Entry & Ease of Entitlements
In part two of our series on what to consider when starting a self storage business, we're going to take a look at why some markets are especially prone to oversupply. In this article, you'll learn how to predict dramatic increases in supply-potentially before the trend begins. Stay tuned!
StorageMart started with a single store in Columbia, MO and has grown to be the largest privately-owned, family-operated storage company in the world. StorageMart is led by the Burnam family, which has been in the storage industry for three generations. Dedicated to providing easy, clean, and friendly service to each and every customer, StorageMart is also committed to giving back to the many communities it calls home.