Want to start up your own business? Are you willing to establish your estate portfolio regarding your business? Then nothing can be more profitable to you than starting your self-storage business. But now a question arises that what will be the cost to build storage units?
In this article, you will soon be apprised of not only the cost to build your own storage units but all the things you may need to know before starting your own business in the self-storage industry.
So, keep scrolling down.
Let us start with what is actually a self-storage unit.
What Is a Self-storage Unit?
A self-storage provides us with clean and secure storage space to store our own possessions and property. A self-storage unit gives us complete control over our property.
A self-storage locates in a storage facility that provides us the flexibility to rent a space that fits best to us according to our needs.
Unlike the full storage service, we can lease a self-storage unit as long as we need it on a monthly basis. There are no more, longer contracts.
It allows us to store our belongings that couldn’t fit at our house or our business property that couldn’t find a space for its storage.
Storage Unit Business
The self-storage business is one of the rapidly expanding businesses in recent decades. It is the reason that it engages the new businessmen towards itself.
In 2020, the total revenue of storage units was found to have amounted to nearly 2.44 billion U.S. dollars. Over 50,000 self-storage units have been established in the United States, the number is still growing. People are getting intimate with the advantages and ease of storage units, making the storage unit business a fast-growing business not only in the United States but all over the world.
Storage unit business looks quite appealing. But before planning your business, let’s discuss further storage unit business.
Is Self Storage Profitable?
The answer is simply yes.
A self-storage business can be more profitable than other businesses, even if it is 5-6% more profitable, by an estimate than the other general business plans like starting up a restaurant.
A self-storage business can be the best option for people planning to start a new business. It requires less previous experience, giving you tremendous success within a short span.
A well-established and facilitated storage unit can favourably operate in the 83-93% occupancy range. According to Statista, the occupancy range is 90%. But it may take more than two years to gain 90% occupancy, experts said. As fast as the industry is developing, the occupancy range is expected to increase.
The success of the self-storage estates in the recent decades can be well understood by comparing it with other real estate investments. An in-depth study (by The Parham Group) that focused on the failure rate of multifamily, office, retail, and self-storage developments between 1980 and 1987 concludes the following:
- The failure rate of multifamily found to be 58%
- The office had a failure rate of 63%
- The failure rate of retail was to be 53%
- But the failure rate of self-storage found to be only 8%
The study is enough to satisfy you about your investments in self-storage. It is found to be more profitable than other estate portfolios.
What Steps Do I Take To Ensure Profitability?
As soon as we plan up a new business venture, we begin to strive to ensure our profitability. Let me talk over the steps that I took to ensure profitability in the storage unit business.
Follow these outlines step by step to set up your potential in the self-storage industry.
1. Looking for a suitable location.
Locate the suitable location to build up your self-storage units. Location will highly affect your profitability so, be cautious while searching for a spot. Urban areas are far better than rural areas for your business.
2. Complete a Market Analysis.
Do a complete analysis about competitive market and occupancy range etc.
3. Calculate Your ROI.
Compute your return on investment (ROI). Calculate your profit margins and ensure that they can produce enough revenue that satisfies your profitability goals.
4. Plan your building architecture.
Meet your architect, sketch a model and plan the architecture of your self-storage unit buildings. Building architecture will highly affect the profitability of your business.
5. Create a Construction Budget.
Set up a construction budget. Meet the other self-storage companies and gather the information regarding your business.
6. Secure Purchases.
Make a proper budget plan for your business venture. Look for loaning sites that may help you start up your small business of self-storage.
7. Building permits.
Don’t forget to register your building and pay land taxes.
8. Construction of building.
Look for a construction company that has experience in constructing self-storage units.
9. Hire staff.
Hire a qualified staff. Preference should be given to those who have experience in dealing with renters of a storage unit.
10. Market your business.
Market your self-storage company by digital advertising. Open up a website, then arrange an opening ceremony.
How Much Can We Make With Self-storage?
The location, business criteria, and marketing skills determine how much you can make with a self-storage business.
According to an estimate, the self-storage facilities can generate profit margins that can be 41%. It depends on the location and your business skills alike in any other business.
According to Statista, storage units segment revenue amounts to $4,834 in 2021. The market is assumed to grow annually by -1.41%.
Why Do We Need Self Storage?
Have you ever felt that your home is running out of space? Ever wondered about a storage area where to store your furniture temporarily while renovating your house? Or want some space for your vehicles to stand.
At least once in your life, you would have definitely realized that your house is too small when compared with your housing stuff. You are not alone here in having this happen. We all sometimes in our life need to rent a storage area but not for too long.
Here is where we all need to lease a self-storage unit. What about businessmen who are always in search of some vacant storage area? Their need for a self-storage unit is much more than all of us.
For What Self-Storage Is Used
Have a glance at the following uses of self-storage units, you will get a good idea of why the self-storage business is growing day by day.
- Relocating your office or house: While shifting your house or office from one place to another, you will find a need for a storage unit to temporarily occupy your furniture and relevant stuff.
- Renovating your house: You will urge for a storage unit after commencing to renovate your residence.
- Storage for vehicles: The first idea that comes to mind is about storage units when it is a concern for your Vehicle.
- Business storage: To store equipment, archive documents, or data in the form of bulky hardware storage units is good and a secure choice. You’ll need some storage area to fulfill your business needs.
- When your house is running out of space: Or simply whenever you realize that your apartment is getting filled with stuff, not of daily use, you may rent a storage unit to let your house have a breath of relief.
Self Storage VS Storage
Self-storage units allow you complete control over your possessions. You just rent a self-storage unit; it looks as if you have owned it. The keys to your self-storage unit lock are handed to you as soon as you pay rent.
You can visit your storage unit whenever you want (unfortunately, not when it has been closed).
Contrarily, you just hand over your possessions to full-service storage officials, they will pick them up, store and then deliver you directly. You will not have easy access to your property.
Pros of renting a self-storage unit:
- You have easy access to your property.
- Lower rates than full-service storage.
- Temperature control self-storage units are available for your temperature-sensitive stuff.
Cons of renting a self-storage unit:
- You have to deliver your own luggage there.
- Variabilities in security, cleanliness, etc.
Pros of renting a Full-service unit:
- Items will be picked up and delivered by the company.
- The company itself will pack up your possession.
Cons of renting a full-service storage unit:
- Some companies will charge you delivery charges.
- They mostly allow minimum storage of at least six months.
Average Cost To Start The Storage Unit Business
How much does the storage unit business cost on average? The question seems just to be simple but the answer to it is not as simple at all. The average cost to start-up your storage unit business considers many variable factors like location, design, required site improvements. All these factors will alter your cost for business.
Let’s try to find out how much you require at minimum for your storage unit business.
How much will land purchasing cost you?
Buying land for your start-up business is the biggest but variable cost. You should spend an average of 25-35% of your total business budget to buy land, according to Mako Steel.
However, the Parham Group suggests a spend estimated to be $3.25 per square foot for land to start-up the storage unit business that is about 45%. Land costs are greatly varied according to the land site. The rates are much higher in urban areas as compared to rural areas.
Depending on your business budget, you may choose the land to buy for your business.
What Does Construct Cost?
The cost of construction is so variable that it is not possible to give a fixed estimate. Firstly, the cost depends on whether you want to build a single-story, double-story, or multiple-story building for your business.
The construction costs largely depend on various factors like the current condition of the land, costs on digging, draining and clearing, etc. It largely depends on whether you develop a climate control self-storage unit or not.
Temperature control self-storage unit is appealing to the clients as many of them need to preserve their storing stuff that is temperature-sensitive. But a climate control self-storage unit may cost you double to construct than the simple self-storage unit.
On average, a single-story will cost you $25-$40 per square foot. A multi-story building for a self-storage facility cost ranges from a minimum of $42 per square foot and the maximum of $70 per square foot.
According to Mako Steel, the top-line self-storage facility units have rentable square feet between 60,000 and 80,000. It will cost you $45 to $65 on construction per square foot.
How Much Does It Cost To Keep The Business Running
The ongoing monthly expenses include:
- staff payments,
- property taxes,
- utility bills,
- insurance and,
- security costs.
The Parham Group suggests the operating expenses range from $2.75 to $3.25 per square foot. The monthly costs will increase if you have built climate control self-storage units.
Writing The Business Plan
If you are willing to start up a business, no matter what the business, writing the business plan is the primary step.
A good business plan drives your business towards success. You may write your business plan considering any of the business plans templates available online. You may hire an expert business plan writer for this purpose. Don’t forget your business plan is the foundation of your business.
A business plan will be according to your own needs, but the business plan for your self-storage facility should contain the following features in general.
- Start-up budget
- Business goals
- Business structure
- SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis
- Pricing policy
- Marketing analysis
- Marketing strategy
- Sales strategy
- Staff management (should have an experienced and qualified staff)
- Marketing competitive analysis
- Sustainability and Expansion Strategy
Have you done with your business plan for a self-storage facility? Now, meet your milestones like naming your business, sketching a business logo, registering your business, recruiting employees, looking for land, generating your business budget, etc.
Is Buying Existing Self Storage Facility Profitable?
Should I construct self-storage units or buy the existing ones?
But the answer can’t be simply yes or no. It all depends on your specific business needs, location, and your business budget.
When it comes to buying an existing self-storage facility, then the question arises is it profitable?
If you buy an existing self-storage facility, it will save a lot of the time and effort required to give a proper start to your business. But you need to bestow all of your skills to manage and develop your business, it would be profitable enough.
On the contrary, if you construct your own self-storage units, you will be able to choose land, construct storage units, and adopt other management processes according to your needs.
How To Manage And Market Your Self Storage Business?
Just like other businesses, you should now focus your attention on your business management and marketing.
Consider the following points to appropriately manage your self-storage business.
- Your self-storage business should be managed by considering the bottom line and ensuring security management.
- Assure the protection of your buildings, customers, and their belongings that are under your security.
- Manage your maintenance, insurance, and operating costs.
- Hire qualified and well-mannered employees.
How to market your self-storage business?
The level of competition is increasing day by day. Therefore, you need to focus on your marketing strategies in order to develop your self-storage business to 90% occupancy as soon as possible.
Boost up your marketing strategies. Get benefited as you can from digital marketing to promote your business. Referral marketing can be favourable in the case of a self-storage facility.
Use community networking. Advertise your business through newspaper, emails, social media marketing, along with large bulky banners.
According to a general estimate, a self-storage facility costs $25 to $70 per square foot to build, according to Mako Steel, but it greatly varies.
Land cost and construction expenses may vary according to the location and offerings of the construction company. Similarly, other costs may also vary.