September 22, 2025
When my partner and I built our first self-storage facility in 2006, “experts” scoffed at the fact that we spent nearly $40 per square foot to construct 500 units in a market with 15,000 people. Regardless, we made it look nice and built it to last.
We were pretty green back then, so we had hired a leading self-storage feasibility expert to give us advice. I’m glad we took it. That site has far exceeded our expectations in terms of performance, with continual growth every year. The real key was viewing the investment for what it always was—a long-term, cash-flowing asset.
Self-storage deals are thinner now. That’s just reality. We definitely have to be careful in markets with more competition, higher land and development costs, and today’s rental rates. But we’ve always had to be careful. Rates have gone up and down—way up during and after the pandemic, and then way back down. And maybe they’re bouncing back up now.
One thing is for sure: You can’t build anything remotely nice for $40 per square foot! Insurance costs and real estate taxes are up. The best self-storage operators are constantly reevaluating budgets, available technologies, marketing strategies and efficiencies. We must be smart about every step on every new investment because the margins are tighter. This is why feasibility studies are more important than ever.
A self-storage feasibility study defines and assigns weight to key variables: rental rates and trends, costs, returns, expenses, demand, and population. Each potential investment is unique comes with a myriad of opportunities and threats. A proper study quantifies the measurable economics of a deal relative to possibility as a quality investment over time.
For two decades now, I’ve worked with self-storage developers in every corner of the country, evaluating the viability of new projects. I’ve seen some real dandies and real ugly babies. Those of us who’ve been around a while have witnessed dramatic shifts and changes in how new stores are built, managed and marketed. A feasibility study helps the owner, investor or builder sort through the data to devise the best investment strategy for today’s challenging markets.
“It’s frustrating to work a market with very high occupancy levels and low rental rates,” says Bob Copper, founder of Self Storage 101, which offers industry consulting. “There are markets good to build in and markets that are good to buy in, and they are not necessarily the same.”
Former Secretary of Defense Donald Rumsfeld once pointed to the “unknown unknowns.” We can’t see those. No self-storage feasibility study can forecast the next macro event like COVID-19. But we can reasonably predict other mission-critical probabilities like rental-rate movement, absorption and dynamic operating expenses. These are key elements of every storage deal.
“A strict mathematical look at any market requires context and analysis to identify risks and opportunities and, ultimately, the viability of a new investment,” says Jim Chiswell, the feasibility expert I hired all those years ago. “The strict pluses and minuses of market data may overlook aspects of quality, age and type of competitor, and we have to understand those on a new development.”
When previewing a site for a potential self-storage project, architects and engineers help us define zoning allowances, size and topography, soil quality, drainage, buildable square feet, stormwater management, and utilities. We count the cars passing a site, or measure the distance to competitors or main thoroughfares. When a parcel requires rezoning or a variance, it often enters the world of politics, adding time and cost to the development cycle.
“I would have to say that ‘patience’ is the biggest challenge for most developers today,” Chiswell says. “Even with land properly zoned for self-storage, it always takes longer to get a project approved than most folks anticipate.”
A supply-and-demand analysis is fundamental to any study of any type of market, including self-storage. Some modern technologies and data sources allow us to very quickly view overall market trends, demographics, upcoming new supply, and real-time and historical rental rates. In a feasibility study, this quantification of the actual relationship between supply and demand is critical to determining how a small market will absorb new supply over time. Oversupplied markets trend toward lower rents and slower lease-up. Undersupplied markets experience the opposite.
No single metric can predict the viability of a future investment or the strength of a market. For years, self-storage experts genuinely attempted to standardize a market-saturation point referred to as “square foot per capita” as a measure of a market’s ability to absorb new storage or equilibrium. I still get calls from developers who mistakenly buy into this.
Square foot per capita never made real sense for quantifying market saturation because it only measures total supply. I’ve worked in markets with 2 square feet per capita in which rates are tanking. Conversely, some with 15 square feet per capita are nowhere near saturation, with super-strong underlying fundamentals. Self-storage rental rates and occupancy levels are the only meaningful variables that describe the relationship between supply and demand. With real surveys and research, we can define that relationship.
Financial analysis wraps the site and market data into a working model. Pro forma is always informed by market dynamics and includes a robust and detailed look at development costs, rental rates over time, operating costs and absorption. Investment analytics distill market and site data into dollars and sense (and, no, that isn’t a typo).
“A solid feasibility report should be a candid assessment of the risks and rewards involved in building the storage business,” Chiswell says. “Many people look at self-storage as a real estate investment when, in reality, you’re building a service business. Just because you are going to have the newest facility in the market does not mean existing storage customers at that older facility down that road are suddenly going to move out of their current facility to the new shiny object.”
“I find a lot of first timers haven't fully thought through how to manage their property or a potential development,” Copper adds. “Just the daunting process of entitlement and permitting can be overwhelming.”
Self-storage developers and owners want profit, and that means predicting facility performance and preparing to mitigate hurdles. I’ve seen some great investments in weak markets, where land or building costs are relatively low or weak competitors aren’t really paying attention, which creates opportunity. I’ve also witnessed bad deals in undersupplied markets. If rents are low or development costs are prohibitive, we measure those before making big investments.
You have to quantify risks before developing reasonable self-storage investment strategies. Perhaps the most important number a financial model yields, even for a strong project, is the amount of capital necessary to cover operating and cash-flow deficiencies through lease-up.
“I remember doing a feasibility study years ago in Texas, outside of Houston, when, on paper, there were 18 existing facilities within a five-mile radius of the site. Judging from the residential profile, using just pluses and minuses, the location should not have worked,” Chiswell says. “However, mystery shopping revealed that the newest facility was 15 years old and the oldest had been built over 30 years prior. There was a clear ‘qualitative’ opportunity to successfully introduce a new state-of-the-art facility with all the amenities many of today’s customers desire.”
Self-storage feasibility studies range in price, scope and value. One of Warren Buffet’s principles comes to mind: “Price is what you pay; value is what you get.”
For some self-storage markets, a general overview (often referred to as a “desktop study”) may sufficiently answer the key questions. As markets and deals grow in depth and complexity, so does the need for a more robust study. Expect to pay $3,000 to $6,000 for a desktop version, and up to about $10,000 for a detailed feasibility report.
Industry professionals who provide these studies bring decades of real-world operational and development experience to the table. The value of expert advice from people who’ve done this work for a long time, can’t be understated. The developer who has built or is building projects in multiple markets is generally on top of pricing trends and value engineering. The operator who’s renting units understands demand, marketing budgets, unit mixes and rents, and rising operating costs beyond just the averages.
“It’s experience that makes the difference,” Copper says. “Using a consultant who is or has been an actual owner/operator/developer makes a lot of sense. This isn’t theory for us because our hand still shakes when we are borrowing that big money. Developers need someone on their team who is willing to tell them ‘no,’ that their initial plan is not a good one, or how to build a better project. Don’t argue irrelevant points with your consultant when they tell you it's a terrible idea. That's why you hired them—to keep you out of trouble and from going broke.”
Couldn’t say it better myself!
Benjamin Burkhart owns StorageStudy.com, a self-storage feasibility and consulting firm based in Richmond, Virginia. He’s also a co-owner of Community Self Storage in Powhatan, Virginia, a facility he developed and now actively manages. Contact him at [email protected].
Benjamin Burkhart
Owner, StorageStudy.com
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