Self-Storage Feasibility Studies

Nick Malagisi answers the most commonly asked questions about self-storage feasibility studies

Why Do I Need to Do This Feasibility Study?

When someone approaches me about my self-storage feasibility studies, I start by asking two important questions: First, is the bank requiring this study? Second, who recommended me? The answer to these questions may influence my decision about whom I work with. Generally, the self-storage feasibility study provides peace of mind. If it’s not a bank requirement, it offers reassurance to the owner, especially if they are using personal or family funds.

I also take the time to explain the differences between a market study and a feasibility study and the distinction between an in-person feasibility study and a desktop study. This is because I do not perform desktop studies; I only conduct in-person assessments. I believe that if I am going to put my signature on the report, I need to be present at the site.

However, I am open to conducting a follow-up desktop analysis six or twelve months later, if needed.

What Are the Main Factors of Your Feasibility Studies?

Here’s a breakdown of the key components of my feasibility study:

1. In-person assessment
2. Primary trade area identification
3. Market study
4. Economic analysis

I begin by explaining what my feasibility study includes to determine if it aligns with their needs. First, we need to identify the primary trade area for the site, which isn’t always a simple three-mile radius.

Next, we analyze the supply and demand in the area, which informs us of our market study for rental rates. It’s crucial that we compare similar types of storage facilities in our market study, ensuring we’re comparing apples to apples.

If I’m brought in early enough, I can make recommendations to the client regarding what to build, allowing me to tailor my cost analysis accordingly. Sometimes, I receive an already created site plan. If a client has already approached a bank about financing, they may need a feasibility study, which takes that portion of the analysis out of my hands.

I focus on what is already available and finalize the economic analysis, which is the bulk of the feasibility study. Most of the so-called real market studies I’ve encountered do not delve into the economic aspects. As a real estate professional, I understand the importance of this component, and that’s where my expertise comes into play.

What Subjects Do Your Feasibility Studies Cover?

Normally, my report will contain the seven items below but if a client is looking for something above and beyond we have a conversation about it.

1. Property/Neighborhood Description
2. Demographic Report & Analysis
3. Competition Survey & Analysis
4. Market Analysis/ Feasibility
5. Supply/Demand analysis
6. Income & Expense Pro Forma
7. Recommendations/Conclusions

What’s The Normal Turnaround Time?

Once we agree on a date for my visit, I typically turn around the reports within three weeks. I don’t linger with them. I understand the urgency of getting these reports turned around quickly, and although there have been instances when I had to rush, I’ll give it my best effort. If you need the report next week after my visit, just let me know.

Over the past 8 to 10 years, I’ve been fortunate to have access to much more data than before. As I mentioned, I don’t want to take three days out of my week or cost anyone money if something significant stands out ahead of time, which might mean my visit isn’t necessary.

Another approach I take, which I don’t see often in others, is conducting an S.W.O.T. analysis. I provide insights into the Strengths, Weaknesses, Opportunities, and Threats and give my recommendations. Ultimately, the decision is theirs. I’ve had people ask why I included certain points in the report, and I tell them it’s because it’s the truth.

You’ve Worked in Storage in Many Aspects

People look at my resume and see that I worked for Public Storage, a leader in the industry, particularly in their corporate real estate department and in development. I often tell them that I conduct much more effective feasibility studies now than I ever did back then. Generally, that’s enough to satisfy everybody.