Unit mix is top-of-mind for self-storage developers and for good reason: The right mix can make the difference between a quick lease-up at satisfying rental rates vs. slow move-ins and discounting. Ultimately, your configuration will be influenced by property characteristics, building size and layout, but it all starts with market dynamics. Let’s look at key factors to determining a successful unit mix in any market.
Competition
Secret shop local competitors and evaluate their offerings and prices. Are there unit sizes missing from their inventory? If so, you might want to go heavier on those sizes. If they tend to discount specific sizes, it might mean there isn’t enough demand to fill available units. If existing facilities are expanding, pay close attention to the unit types they’re adding. It’ll tell you which sizes rent well.
Customer Demographics
Look carefully at the customer base. To whom will you be renting? This can tell you a lot about which unit sizes might be more popular.
Renters vs. homeowners. Customers tend to rent from the nearest facility, so building close to housing developments is important. However, pay attention to the types of residences, as they’ll influence your mix. Apartment dwellers tend to rent smaller units, while homeowners tend to need larger units, particularly during a move. A typical four-bedroom house can easily fill a 10-by-30 space and more.
Income. Customers with higher income are more likely to pay for storage. Of course, they’re also more likely to have high expectations for curb appeal, features and amenities.
College students. If there’s a college or university nearby, students nearly always need storage for their goods in the summer months. That said, they frequently rent smaller units, and they tend to be seasonal customers with higher turnover.
Local Conditions
Like demographics, geography has a role to play in determining self-storage unit mix. Tenant needs will vary from region to region. Here are a few examples of how location can affect consumer preferences.
Basements and garages. Customers in markets where homes are commonly built without basements, such as Arizona, tend to have a greater need for self-storage. Residences in dense urban areas also tend to be shy of storage space. Some residential neighborhoods lack garage space while others commonly feature two- and three-car garages, which make it easier for people to store their goods at home. Pay attention to these trends, as they’ll help you understand demand for storage in your area.
Climate. Climate-controlled storage continues to increase in popularity, particularly in areas with high humidity or intense heat or cold. To a developer, it offers better land coverage (assuming you build wider buildings) and return on investment. Though it’s become quite common in some markets, some areas still offer the opportunity to be among the first to provide this type of storage.
Boats and RVs. Consider the activities that are popular in your area and whether there are “toys” associated with them. Are you near a body of water or other natural features that encourage the use of boats and RVs? Will tenants need to store motorcycles, jet skis, ATVs and trailers? If so, you may want to build more large units to accommodate these vehicles. For example, in my area, boat owners prefer 12-by-25 units.
If your market shows demand for larger units, consider the space required (unit size plus aisle width) vs. expected rental income. Larger units tend to return lower income per square foot. Angled parking or building designs can help reduce land consumption, but in general, it’s best to build smaller units.
Flexibility
If your project is a building conversion or you’re adding a new climate-controlled building, the unit mix can skew smaller, giving you more flexibility. With traditional drive-up buildings, you’ll need some large units to accommodate customers with cars or boats; but for interior units, everything needs to fit through a hallway. Interior-access projects rarely have units larger than 10-by-20.
Many self-storage developers are also interested in being able to adjust the wall between back-to-back units. For example, you can change two 10-by-20 units into one 10-by-10 and one 10-by-30. Another option is to remove the wall entirely to create a drive-through unit. While this is certainly a way to alter an existing unit mix, the easier solution is to adjust rental rates to entice customers to rent the units you have available. This doesn’t mean necessarily mean discounting, either. You could make your 10-by-20s look more attractive by raising the rates on your 10-by-15s and 10-by-25s.
If you consider these and other market factors, you’ll be ready to create a site layout and unit mix that balances customer demand with lease-up and income needs. If the project can be built in phases or you build flexibility into your plan, you’ll have the opportunity to adjust unit mix as you grow.
Steve Hajewski is the marketing manager at Trachte Building Systems, which designs, manufactures and erects a full line of pre-engineered and customized steel self-storage systems, including single- and multi-story, portable storage, interior partition and corridor, and canopy boat/RV. He also owns a self-storage facility in Wisconsin and is a frequent contributor on Self-Storage Talk, the industry's largest online community. For more information, call 800.356.5824; visit www.trachte.com.
