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Intricate Demand Dynamics
Cracking The Code Of Site Selection
By Garrett Byrd

s investors navigate the terrain of potential self-storage, they must decipher the complex interaction of self-storage supply, population dynamics, and pricing strategies to unlock the true potential of their ventures. In this comprehensive exploration, we dig into the pivotal role of square foot per capita (supply), population, and pricing in the quest for optimal self-storage site selection.

Square Foot Per Capita
One such metric that has long been central to the self-storage industry is the concept of “square foot per capita.” This metric, calculated by dividing the total square footage of self-storage facilities by the population of the respective area, provides insights into the supply and use of storage services. It offers investors a fundamental gauge of demand and market saturation within a given locality.

However, the reliance solely on square feet per capita has come under scrutiny in recent times. While undoubtedly important, this metric offers a somewhat limited perspective, failing to capture the intricate dynamics of the self-storage landscape. With advancements in technology and a deeper understanding of market intricacies, investors are now exploring more comprehensive evaluation methods. A market commanding higher rental rates and a strong population are becoming better indicators of self-storage success.

Gone are the days of lengthy manual calculations to determine square feet per capita. Innovative tools like StorTrack and Radius+ have revolutionized data acquisition, allowing investors to access crucial information on demand at their fingertips. Yet, while technology streamlines data collection, the art of site evaluation remains a multifaceted endeavor. I see a lot of experts use a range from 6 to 10 square feet per person. Until I look into details of a specific area, I use 8 square feet per person of the total square feet as equilibrium point.

Beyond the numerical confines of square foot per capita lies a range of qualitative assessments and comparative analyses. To truly gauge the potential of a location, investors must conduct comprehensive facility reviews, considering factors such as manager competency, facility location, class of facility, technology in use, overall appearance, and pricing strategies. It’s a universal approach that transcends numerical metrics, offering insights into the competitive landscape.

Understanding Population Dynamics
Population dynamics serve as the cornerstone of self-storage demand analysis, offering a detailed perspective on market potential and saturation levels. The concept of square feet per capita, though historically revered, presents a partial view of demand dynamics. While it measures the average storage space available per individual, it fails to capture the intricate interaction between supply and demand within a given locality.

By deciphering population density, growth trends, and demographic profiles, investors gain invaluable insights into the underlying demand dynamics, laying the groundwork for strategic site selection. The higher the population is in any given three-mile radius, the faster you will lease up, as the absorption rate increases with a denser population.

However, population analysis alone provides but a fraction of the equation. To truly detect market viability, investors must dig even deeper into pricing dynamics where the details shape investment outcomes.

A significant shift emerges with the exploration of rental rates within a specified radius. Unlike square foot per capita, which provides a generalized overview, rental rates offer a better understanding of market demand. Savvy developers and franchise owners, recognizing this paradigm shift, base their decisions on tangible drivers of success within specific locales.

Navigating Pricing Dynamics
Pricing dynamics stand at the heart of the self-storage industry, reflecting the delicate balance between supply, demand, and market competitiveness. The contradiction between web rates and in-store rents underscores the transient nature of pricing strategies, challenging investors to navigate a landscape loaded with complexities and uncertainties.

Web rates, often characterized as teaser rates, offer customers enticing initial offers that may not reflect the true cost of storage. Conversely, in-store rents provide a more accurate reflection of real-time market dynamics, guiding investors toward informed pricing decisions.

The evolution of innovative pricing models has further heightened the complexities of pricing dynamics, requiring a refined approach to revenue management. From unit occupancy to economic occupancy, investors must decipher a myriad of metrics to ascertain the financial health of a self-storage venture.

Unlike square foot per capita, which provides a generalized overview, rental rates offer a better understanding of market demand.
Within this landscape, reliable demand data assumes paramount importance. Step into the domain of self-storage data websites, which are a wealth of insights into the dynamics of the market. From existing facility information to population demographics, these platforms offer a gold mine of data to inform developers’ decisions.

Yet, utilizing self-storage data websites requires a discerning eye. While undeniably beneficial, these platforms serve as a starting point rather than a definitive source of truth as web rates become a moving target to measure. The burden lies on investors to corroborate data insights with on-the-ground assessments, ensuring a comprehensive understanding of market dynamics.

Effective site selection does not hinge on any single metric but on a combined blend of numbers and insights. The equilibrium of supply and demand exceeds numerical thresholds, representing the essence of market dynamics. Therefore, investors need to approach site selection with keen insight and persistent diligence.

Bottom Line
The quest for the ideal self-storage location is a journey defined by the details and complexity. It has become an art and a science to find the right parcel to develop self-storage. While square foot per capita remains foundational, its limitations necessitate a broader evaluation framework. By understanding rental rates, conducting facility reviews, and leveraging data analytics, investors with the right team on their side can unlock the true potential of self-storage development. It’s a journey guided not by numerical absolutes but by the keen intuition and informed decision-making process of self-storage developers and the team they chose to guide them.

In the perfect utopia, you would want to develop your self-storage facility in an area with high average rental rates of $1.50-plus per square foot, a population of 30,000 or more in a three-mile radius, and limited competition. As the self-storage industry continues to evolve, effective site selection becomes increasingly critical. In an era characterized by technological innovation and shifting market dynamics, investors must adapt their approach to remain competitive. Through the understanding of metrics such as square foot per capita, population, and rental rates, coupled with diligent on-the-ground assessments, investors can identify prime locations and unlock the full potential of their self-storage investments. It’s a journey defined by having instrumental development guidance, adaptability, insight, and unwavering determination to succeed in an ever-evolving market landscape.

Garrett Byrd is the vice president at Storage Authority Franchise which is a leading provider of comprehensive solutions for self-storage development and operations. With a focus on excellence and profitability, we empower franchise owners to achieve elite status in the industry as an alternative to consultants and third-party management. Our proven systems, expert guidance, and unrivaled support help self-storage facilities thrive and surpass all expectations. If you are thinking about self-storage, you owe it to yourself to contact Garrett Byrd at (941) 928-1354 or Garrett@StorageAuthority.com to learn more about the Storage Authority Franchise opportunity.