In the October 2016 edition of the SSA Globe, the Self-Storage Association (SSA) announced the establishment of a “Best Practices Committee” with the objective of improving business across the self-storage industry. To provide the framework of a successful storage business, it is necessary to begin with the initial stage of the facilities themselves: development.
If you were present at the SSA Fall Conference in Las Vegas this year, you may have also attended the informative “Best Practices in Smart Development” session highlighting the advice of industry experts Dean Jernigan, Barry Duke, Alyssa Quill, Terry Bagley and Patrick Reilly. The panel empathetically agreed that information and technology can and will improve your due diligence process when developing a self-storage facility.
For the self-storage investor, developer and owner, I offer you this advice: do your research and do not be afraid to share what you have learned. In an age of unprecedented growth for the storage industry, as well as current experience at the height of the development cycle, we must remain conscious of the capability to oversaturate a market and/or to waste resources by building in a less profitable area. The SSA has the educational resources needed to aid with these issues. You can turn to the SSA when you are in the site selection process and you will find annual demand studies, market inventory updates and land use resources. To educate yourself before breaking ground is for the betterment of the industry, as well as your own project.
Over the years, superior technology has made its way into the development process for self-storage facilities. Specifically, standardized data services provide due diligence tools for real estate brokers, developers, contractors and self-storage owners alike. Providers such as REIS, STR and Stortrack have created efficiencies by offering detailed reports that deliver market data, development pipeline reports, competitive pricing analytics and more. Additionally, these data sources can also provide insight into possible pockets of submarket undersupply, even in MSAs thought to be oversaturated. These are affordable services and more importantly can help you avoid costly mistakes.
As my last takeaway, I recommend viewing the twitter feed of Dean Jernigan, Chairman and CEO of the publicly traded specialized self-storage lender Jernigan Capital. Periodically, he will update areas he denotes as cities on the “Danger List” and the “Worry List”. These cities reflect situations where the amount of new supply under development exceeds 10 percent of the current supply. It is worth considering for the industry veteran and newcomer alike.