Welcome to the final installment of our three-part series on important considerations for starting a new self storage business or expanding an existing business to a new location. In part one , we explored the importance of understanding regional supply growth trends before investing in a new market. In part two , we discussed barriers to entry and how the easiest markets to enter invite fierce competition. Finally, in part three, we’ll take a look at operating costs and how they could chip away at your bottom line.
As Unemployment Falls, Expect Wages to Rise
Throughout this series, we’ve been using the Omaha self storage market as a prime example of what can happen when a given region is flooded with an excess supply of storage facilities. Our final tip, however, is something that all savvy business owners—regardless of industry—should consider before entering a new market: the current and projected unemployment rate. In Omaha, the unemployment rate is somewhere around 3%. While that’s good for the local job market, it also means wages are steadily rising. And, when it comes to your self storage business, employee wages are one of the most significant operating costs you’ll incur.
Rising Self Storage Valuations Drive Up Property Taxes
Your property taxes are another major operating cost eating into your profitability. When a market enters its prime, self storage owners often see their property valuations increase significantly. Sounds like a good thing, right? The downside of this trend is that real estate purchase prices also start climbing upward in lock-step with the valuations—even surpassing the values listed on local property tax forms. Before you know it, county regulators are forced to adjust property tax rates based on this new demand.
Let Market Research and Data Inform Your Next Investment
Deciding where to take your self storage business next shouldn’t be a mysterious process. It also shouldn’t be something you do on a whim or based on a “gut” feeling. Instead, we encourage self storage owners to do their homework, starting with the three tips we’ve presented over the course of these posts. If the location(s) you’re considering hold up against risk factors like oversupply, increased competition, and projected operating costs, it could be a sign that you’re on the right track.
As the largest privately-owned, family-operated storage company in the world, we’ve learned a few things along the way. What started as a single store in Columbia, Missouri, is now a 200-location business operating in three countries. 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.