No matter how good or bad the economy is, the self-storage sector seems to always performs well. But why is this? Well, people have lots of things, and they need a place to store them. And as we all know, houses and apartments are getting smaller, so renting a storage unit makes a lot of sense for many of us. If you're an investor looking to get the piece of the action, you'll want to find out how much it costs to build a storage facility, and that's what we're here to tell you about.
Right away, we can tell you that there's no easy answer here. First of all, your costs will depend on your location and the number of units you want to build. However, there are plenty more factors that you'll have to count in if you want to get a proper estimate.
Of course, we'll talk about them all in this article, so let's get started.
How Much Does it Cost to Build Storage Units in Total?
Whether you're new to the game or you have some experience and want to start your second facility, the cost of building it will be the same. And a rough estimate is that you can expect to pay anywhere between $25 and $70 per square foot. It's a big range, but as we mentioned, there are many variables you need to sort out.
For example, the price depends on the cost of steel on the market. If it goes up or down, it'll affect your maths. Furthermore, if there's a labor shortage in your area, you'll have to pay more to get it done. And, of course, building in metro areas will cost you more than building around rural communities.
Tip: If you want to save money, consider buying an existing storage facility. You may have to fix it up a bit, but it could cost you less in the bottom line.
Finding the Right Site for Your Facility
You can't build a self-storage property if you don't have a place to build it. So, finding the location should be the first thing you do. However, this can be tricky if you don't know what you're looking for. In essence, you want to ensure three things:
- Right price
- Right zoning
- The right demographics to support your business
If you want to build your average storage facility, you'll need about 2.5 to 5 acres to support it. A good rule of thumb is not to spend more than 25% to 30% of your budget on land alone. Of course, this won't concern you if you already have the land you need, but keep in mind that you still might need to rezone it to make it suitable for the facility.
If you're dipping your toes in the self-storage industry for the first time, you'll want to start with market research. According to Los Angeles Transfer and Storage experts, you want to know how much you can charge and what kind of cash flow you can expect before you invest any money into it.
How Big Is the Building You Want to Build?
Before you set out and put money down for that piece of land, you need to figure out how big a building you want to build. The critical question here is if you want a single-story or multistory facility. But on top of that, you also need to know how many storage units it'll have and the facility's total square footage.
If single-story is all you need, you're looking at the construction price of $25 to $40 per square foot. However, multistory buildings will set you back anywhere between $45 and $70 per square foot. Keep in mind that these figures don't account for the land or the site improvement costs, and these can get pretty pricey in some areas.
Once you answer all these questions, you can move on to the thing you came here to learn to do — estimating the cost to build storage units you want.
Tip: Think about the size and the location of your new storage facility. You shouldn't invest in it if you're not sure it will pay off.
Making an Estimate of Building Costs
The best way to learn anything is through examples, so that's the road we'll take. Here's how to calculate the costs of building your new storage facility.
Say you want to build a 60,000 square foot place and have enough space, so you don't have to go multistory. It's safe to assume that your construction costs will be somewhere around $35 per square foot. So that comes down to the price of $2.1 million.
However, we still have to account for those site improvement costs. And for the purposes of starting a self-storage facility, you're looking at the price anywhere between $4 to $8 per square foot. Let's take the middle ground and say you'll pay about $6, which will add another $360,000 to your tab.
If you want your units to be climate-controlled, be prepared to pay more. The AC system will bump the construction price quite a bit, but you'll be able to charge more when you rent it. So, it might make sense to make some of your units climate-controlled, but not all of them. In theory, you'll get the best of both worlds.
Get the Size Right
The size of your storage facility will have the most considerable effect on the price you'll pay to build it. And if you want to save some money, it may seem tempting to go for a smaller facility. However, it might not be the best idea.
The smaller your facility is, the less cost-effective it'll be. Running costs don't rise dramatically with more space, and building your self-storage brand will be the same no matter how big or small the place is. If the market is there and you do the marketing part right, you won't have any issues filling up even a 100,000 square foot facility.
And that's how you calculate the cost of building a storage units. If you get the land for a reasonable price or the area needs such a space, it will pay off. Still, take things slow and ensure you're making the right moves before you make them.