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It is a beautiful thing to own a storage unit business, especially with the industry’s growth and annual revenue, but it is imperative that you understand the costs required to establish one, to adequately budget, plan and look for capital. Therefore, it is suggested that you estimate the important costs which include land costs, construction costs, marketing costs, and operating costs. We answer, in detail, questions on the cost of starting a storage unit business.
What is the average development cost for the startup of a storage unit business?
The cost of land is always one of the biggest costs when starting most businesses. Note that you will only use about 45% of the land purchased for your storage unit, so the net cost of land can also be looked at as $6.82 per net leasable square foot. Therefore, this can make up about 25 to 30 percent of your development costs. The permissible coverage of the site greatly determines the development’s net-leasable square foot. The geographical location of the land and other related variables greatly determines its cost. However, in the long run, the rate you charge customers will also depend on rental prices in the area discovered during your market research and feasibility studies.
What is the cost of construction?
This is a variable cost, i.e., it is difficult to estimate a fixed price. Depending on the actual landscape of the site, normal development of site costs between $4.25 to $8 per square foot. This also depends on how much digging, clearing, and draining is required on the land. On an average a single-story storage facility costs $25 to $45 per square foot to build, while a multi-story costs $42 to $70 per square foot for construction. A high-end storage unit facility has 60,000 and 80,000 rentable square feet and costs $45 to $65 on construction per square foot as estimated by Mako Steel. The amenities to be included in the storage unit also determines the overall cost of construction.
How much will it cost to market a storage unit business?
As important as it is to market your storage unit business, it should not cost more than 6% to 8% of your gross revenue income. You can advertise using internet ads, mailers, billboards, or another productive method. It is imperative to attract customers, however, it usually takes somewhere between 8 and 24 months for a self-storage unit to operate at its full potential, so don’t be pressured if you are not getting your expected revenue in your first year.
How much do you need to keep a storage unit facility running?
Typically, a storage unit operating expenses range from $2.75 to $3.25 per gross square foot of the facility. Variable cost in different markets, such as property taxes, manager salaries, and utility costs causes the difference in expenses. In conclusion, developing a storage unit business requires expertise. Therefore, your team should consist of experienced legal, real estate, fiscal, construction, project, and design professionals. According to Statista, the industry’s current average occupancy stands near 90%. The more the demand for use of a storage unit, the more the industry matures. To learn more about the cost of starting a storage business or to get help covering those costs, contact the team at QT Business Solutions for a free consultation.