Land Considerations for Constructing a Self-Storage Facility
In this article, we explore some of the most important considerations for choosing land for the new construction of a self storage asset.
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When it comes to the new construction of a self-storage facility, investors must make critical decisions regarding the land the property will be built on. Between choosing a desirable market for the facility and locating an adequate parcel of land that will suit the design, investors are faced with several areas in which they may need to compromise. To help investors make more informed decisions on the location of a self-storage development, this article covers some of the most important land attributes worth considering before breaking ground on a project.
Zoning for a Self-Storage Facility
Improperly zoned land can lead to a complete halt on a project. The key to avoiding a disastrous scenario is education: Zoning information is typically readily available through city or county websites. For investors interested in developing a self-storage facility, the first thing to investigate would be which zoning category allows for a self-storage facility in a desired market — and the land available within that category. Investors must still be careful, however, as even accurately zoned land may require a conditional-use permit.
It’s also important for investors and developers to take care when dealing with markets with great unmet demand for self storage. Zoning or community restrictions may be in place to prevent this kind of development. While zoning ordinances can be changed through legal processes, it typically requires a substantial investment — and there is no guarantee of success.
Self-Storage Facility Visibility & Access
With zoning playing such a large role in where a self-storage facility can be built, visibility and ease of access become crucial for a self-storage asset to thrive. A highly visible and recognizable business is often a thriving business. To that note, many successful self-storage facilities are located on parcels of land along roads that see high volumes of local commuter traffic. While this type of land is not often zoned for self storage, expect competition for parcels that do permit these facilities.
Visibility is only half of the battle, however. A site might be perfectly visible from a high-traffic freeway but not easily accessible. Self-storage facilities are often visited by large transport and cargo vehicles. Additionally, some customers must make multiple trips to and from their units with loads of goods. Because of these reasons, investors should prioritize the accessibility of their facility. Even a less visible facility can perform well against a popular competitor located on a hard-to-access parcel.
Facility Size & Shape
Let’s say there is a highly visible, easily accessible, and properly zoned piece of land available. The next areas of concern would be the shape and size of said parcel: The efficiency of the facility’s layout greatly depends on these points. Self-storage facility layouts can be flexible — the structures are often highly adaptable, and developers can typically utilize parcels that would be challenging for other property types — but when it comes to design, build, and the efficient use of square footage, nothing really beats squares and rectangles.
Deciding on the right size is a much simpler matter. The size of a property should be relative to the amount of forecasted demand in a market — and the attributes of the facility that will be built. A drive-up facility, for example, requires much more acreage than a multistory indoor property. Depending on the market, however, it may be harder to rent smaller, indoor units. Investors must ensure there is enough usable space for the desired layout to function as intended and to meet the demands of the market.
Special Considerations for the Development of Self Storage Facilities
Proximity to Residential Areas
Current marketing trends coupled with GPS technology have made proximity a huge factor in how customers find what they are looking for. Putting a new property close to residential, particularly multifamily, assets is a twofold victory: It not only solves for accessibility to some degree, but it also gives a facility an edge when nearby customers are searching for a facility online.
Municipal Borders
An asset’s placement inside or outside of city limits also factors into a facility’s online searchability. Purchasing land outside of municipal borders may be less expensive, but an asset across the city line will likely not appear as prominently in an online search if the query includes the name of that specific town.
Water Drainage
Water damage is bad for any asset, but with a self-storage facility — where customers store their valuable possessions — it can be fatal to your business. Flooding can be a common problem in markets across the country. In some places, it is simply a losing battle against Mother Nature, but in others, it is a matter of improper or inefficient water drainage. Regardless of your location, it is imperative to choose land that isn’t prone to flooding, and always comply with stormwater retention requirements of your state.
Final Thoughts
Choosing where to build a self-storage facility can be a daunting task that requires a keen eye and the ability to compromise. Finding the ideal site — the one that ticks all of your boxes — is pretty rare. An affordable parcel may not be too visible. A visible parcel may not be zoned for a self-storage facility. A parcel in an eligible zone may be prone to flooding or be an odd shape.
Choosing the right parcel of land takes time and research, but can make or break a self-storage investment. When deciding, it is okay to make some concessions — competitors likely faced those same choices as well — but keeping these fundamental considerations in mind could prevent an investor from costly problems down the line.
Related Questions
What are the most important factors to consider when selecting a site for a self-storage facility?
When selecting a site for a self-storage facility, the most important factors to consider are the surrounding market conditions, population and job growth, the ratio of homeowners to renters in the area, and the proximity to university campuses, residential areas, and businesses. It's best to look at these metrics within a 3- to 5-mile radius of the facility. Additionally, it's important to analyze the level of competition within the chosen market radius, as well as the saturation level of the market. The saturation level of an area is measured by the gross square feet of storage space available per person. According to Multi-Housing News, the average self-storage inventory per capita across the country is around 7 to 8 net square feet. A market with a per-capita inventory above the U.S. average is usually considered oversupplied, whereas anything below is undersupplied.
What are the zoning requirements for constructing a self-storage facility?
The zoning requirements for constructing a self-storage facility vary depending on the local municipality. Generally, self-storage facilities are considered commercial businesses and must meet the zoning requirements for that type of business. It is important to check with your local zoning board to ensure that your proposed facility meets all of the necessary requirements. Additionally, you may need to obtain a special use permit in order to construct a self-storage facility.
For more information, please see the following resources:
What are the legal considerations for purchasing land for a self-storage facility?
When purchasing land for a self-storage facility, there are several legal considerations to keep in mind. First, you'll need to make sure that the land is zoned for self-storage use. You'll also need to check local zoning laws to make sure that the facility meets all of the necessary requirements. Additionally, you'll need to make sure that the land is free of any liens or encumbrances, and that you have the necessary permits and licenses to operate the facility. Finally, you'll need to make sure that you have the necessary insurance coverage for the facility.
For more information on the legal considerations for purchasing land for a self-storage facility, you can check out this article from Self Storage Law.
What are the environmental regulations to consider when constructing a self-storage facility?
When constructing a self-storage facility, it's important to consider the environmental regulations in the area. Depending on the location, there may be local, state, and federal regulations that need to be taken into account. For example, the Clean Air Act requires that any new construction projects must meet certain air quality standards. Additionally, the Clean Water Act requires that any new construction projects must meet certain water quality standards. It's also important to consider any local zoning regulations that may be in place, as these can affect the size and scope of the project.
What are the costs associated with purchasing land for a self-storage facility?
The costs associated with purchasing land for a self-storage facility will vary depending on the location and size of the property. Generally, the cost of land for a self-storage facility can range from $2 to $4 per square foot. Additionally, you may need to factor in additional costs such as closing costs, legal fees, and taxes. It is important to do your research and consult with a real estate professional to get an accurate estimate of the costs associated with purchasing land for a self-storage facility.
For more information, you can check out this article from Multi-Housing News.
What are the best strategies for negotiating a land purchase for a self-storage facility?
When negotiating a land purchase for a self-storage facility, it's important to consider the market conditions, competition, and saturation level of the area. It's also important to consider the zoning regulations and restrictions in the area, as well as the potential for future development. Additionally, it's important to consider the cost of the land, the cost of construction, and the potential return on investment.
When negotiating the purchase of land for a self-storage facility, it's important to do your research and understand the market conditions and competition in the area. It's also important to consider the zoning regulations and restrictions, as well as the potential for future development. Additionally, it's important to consider the cost of the land, the cost of construction, and the potential return on investment.
When negotiating the purchase of land for a self-storage facility, it's important to consider the following strategies:
- Negotiate the purchase price of the land.
- Negotiate the terms of the loan, such as the interest rate, loan term, and repayment schedule.
- Negotiate the cost of construction and any other associated costs.
- Negotiate the potential return on investment.
- Negotiate the zoning regulations and restrictions in the area.
- Negotiate the potential for future development.
By considering these strategies when negotiating the purchase of land for a self-storage facility, you can ensure that you get the best deal possible.
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