Understanding the Importance of a Feasibility Study
In the beginning of self-storage there was little competition, land values were low and zoning ordinances were more flexible. Self-storage complexes were poorly planned with no thought to layout, unit mix or future expansion. Without a thorough feasibility study, costly “surprises” and construction challenges turned many “can’t loose” ventures into losing propositions.
Today’s savvy investor understands that a feasibility study can make the difference between success and failure. Below you will find an outline of what is included in a typical feasibility study. If you would like more information about having one conducted for your project call us at (303) 867-1179.
The main goals of a feasibility study are to determine whether a particular project makes sense or not. Should you build or not? If the project is a go, the study will provide valuable information that you will use to make decisions on square footage, what types and sizes of buildings you should erect, and a myriad of other considerations that go into developing a successful project.
Detailed analysis of your competition
Consumer Demand Analysis
Rental Projections
Recommended Unit Mix
Profit Projections
Demographics
Characteristics of a Successful Location
Management Plan/Overview
Analysis of the location of your land
Security Considerations
Building Construction Suggestions
Customer Considerations Related to Appearance
Visibility of the Facility
Traffic Count
Accessibility
Assessment of Yellow Page advertising
Climate Control Issues
Pricing Research and Strategy
WHAT CAN YOU PAY FOR THE LAND? THE 66% RULE
Average the rate you receive for a 10×10 and a 10×15 storage unit. Multiply that number by .66. The result is the most you can pay (per square foot) for the ground. This is a rule of thumb that is very important for determining the cost of the land.
| 10×10 rent | $85 per month | $85 x 12mos= | $1020.00 |
| divided by | 100 sq. ft.= | $ 10.20 | |
| 10×15 rent | $98 per month | $98 x 12mos= | $1176.00 |
| divided by | 150 sq. ft.= | 7.84 | |
| AVERAGE= | $ 9.02 | ||
| x .66 | |||
| _________ | |||
| PRICE FOR GROSS SQ. FT. OF LAND | $ 5.95 | ||
*Developed by Buzz Victor
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