Although self-storage has been around a long time in the big cities, it started its ascent in the rural areas in the early 1980s. It took some convincing, but forward-thinking entrepreneurs realized that residents in small communities also had lots of “stuff” they needed to stash and were willing to pay to do it. By the late 1980s it wasn’t an issue of whether there was a market, but how many units a smaller community could support and where to place them. “A lot of them thought, ‘Hey, I have already built one in town so I’ll build another one somewhere else’,” says Sales Manager Jamie Lindau, Trachte Building Systems. “In truth, what they should have done is build another one on the other side of town and been their own competitor.”
The smart guy did just that and cashed in. “Now you might ask: can there be a seventh one?” Lindau says.
The mini-storage business has seen staggered success since the economy went bust. Lindau has been on the frontlines during rise, fall and stagnation. “It trended down in 2008,” Lindau says. “Now it’s only if the area demands it.” Particularly hit were communities also hit by the collapse of the housing market. “There’s still major problems in California, Florida, Nevada – everywhere housing blew up, storage blew up too.”
But there are some bright spots, in the Midwest in particular. “The midwestern United States is actually renting very well. The State of Wisconsin may have the highest occupancy rate ever,” Lindau maintains. Admittedly, that’s because there was not an over-supply of storage units built, so supply has kept in step with demand. Another plus has been the reliance on small local banks, not big banks that were part of the 2008 meltdown. “In the Midwest, the majority of business has been to our existing, smaller clientele in smaller regions because they already have a local resource with their bank. It’s still a viable market for someone who knows their market.”
So, if you do want to enter the market, how should you proceed?
• First, look at demand in the 3-5 mile radius of where you want to build. 3 to 5 miles is the typical distance customers are willing to drive to their storage unit. “What’s happening 20 miles from you is irrelevant,” Lindau says. “How well are existing units doing; are they 90-95-percent occupied to warrant another one?”
• Second, look at the economic feasibility; if you build, will you make money? “You can’t spend $200,000 an acre and have a 10 x 20 go for $60,” Lindau cautions. In the years from 2007 to 2009, some people were attempting to do just that.
• Before you build, know what you want. Trachte designer Jerry Neis offers: “If you want more 10 x 20 units or smaller units, that helps decide what size of building. Then it comes down to how to position the buildings to best maximize the space and, in some places like North Dakota, how to position the buildings for weather: snow and ice. There’s a fair amount of thought process that goes into it.”
• Know your zoning. Larger communities can have strict guidelines, while some rural communities may have none at all. Larger communities may also have design guidelines controlling types of materials used, color of the building, etc. Also understand what types of special permits or variances you might need.
• In smaller communities, at least 10 feet x 10 feet and larger, are more popular than small 5 feet x 5 feet or 5 feet x 10 feet units. That’s because people in smaller towns have a tendency to have larger toys: snowmobiles, boats, RVs, etc.
• Remember that your potential clientele may not only be renters and homeowners, but lawyers, accountants or the local pharmacist looking to store climate-sensitive documents or products, even a contractor wishing to move his business out of his home to store his tools and materials into its own space.
Neis says the biggest mistake many storage owners make, especially in rural communities is not laying out the entire property before building the first unit. “They don’t assume they’re going to one day have a fence and gate. One day they’ll realize: ‘I have 200 units now, I never thought I’d get to 50.’ They never planned to get that big,” he says. The result is a haphazard layout that doesn’t utilize land and space efficiently.
How you plan to manage your business can also make a difference. Mini-storage owners who own an existing business with regular hours often have better success than someone who uses just an answering service. As regional manager Jeff Bouchard, Trachte notes, “People expect service. By giving them better service than the next guy, that’s how you can win.” – by Sharon Thatcher, Rural Builder magazine