Ever wondered about the average cost to build storage units?
You’re not alone.Many entrepreneurs and business owners ponder the same question.
Storage units are big business these days with minimal maintenance and healthy Return On Investment (ROI).
It is a real estate venture that can indeed yield significant benefits.
However it’s essential to understand the cost implications before jumping in.
And to complicate matters the costs can fluctuate dramatically due to a multitude of factors.
So what’s the actual cost?
Shockingly the answer is not as straightforward as you might expect.
Table of Contents
Average Construction Budget
The cost to build a self-storage facility can range from $25 to $70 per square foot. Specific figures can be influenced by numerous factors including the location size of the facility price of steel and presence of labor shortages.
As an example the estimated cost of materials for different sizes of storage units are as follows:
- 100 10’x20′ storage units: $170000 – $280000
- 100 10’x10′ storage units: $85000 – $140000
- 100 5’x10′ storage units: $42500 – $70000
Overall land costs should make up about 25% to 30% of the total development budget. It’s necessary to consider potential soft costs and be prepared for cost fluctuations due to external factors such as changing steel prices.
Factors Influencing Cost
The construction costs for a self-storage facility can vary significantly based on several factors. Key determinants include:
- Location: Costs can differ due to regional economic conditions and labor costs.
- Facility size: Larger facilities usually have higher construction costs but are more cost-effective in the long run.
- Climate control requirements: Facilities with climate control command a higher rental rate and have higher costs.
- Construction methods: The type of construction can contribute to varied costs.
Accurate estimation of costs requires in-depth knowledge of these factors. Various building manufacturers like Trachte Kiwi and Mako Steel can provide estimates for common style metal buildings.
Similarly getting quotes from multiple erectors beforehand is a prudent step. These factors play a significant role in how the average cost to build storage units is calculated.
Appropriate Site Selection
Choosing the right site for your self-storage project goes beyond just finding a piece of land in a major metro area or a small community. Read these insights first before you make a decision.
Relevance of Location and Size
Remember that you will need about 2.5 to 5 acres of land for a self-storage facility. Moreover land costs should make up 25% to 30% of your development budget.
Your chosen site should be able to accommodate the size of storage facility you plan to build. It could be a single-story facility or a multistory facility which of course differ in construction costs.
Importance of Zoning and Demographics
Ensure that your preferred location has the right zoning for a self-storage facility. Getting a rezoning can be a time-consuming and costly process.
The location should also have the right demographics. The general rule of thumb is that there should be 7 sq.
feet of storage per capita within a 3-mile radius to determine demand.
When determining the size of your self-storage facility several factors come into play. It’s not as straightforward as choosing to build a bigger one.
Size and Construction Costs
Small facilities may have lower building costs but it’s the larger facilities that are often more cost-effective. Building costs per square foot can range from $25 to $70 depending on the size and type of facility.
Climate v Non-climate control
The choice between building a climate-controlled facility or a non-climate-controlled facility need can also influence the size and cost. Climate-controlled facilities are more expensive to build but can command higher rental rates.
Storage Unit Sizes
Consider the different storage unit sizes when planning the total square footage of your facility. For instance the cost of materials for 100 strong>10’x10′ storage units differs from that of 100 5’x10′ storage units.
Securing funds to build storage units is a crucial step in the development process. One option to consider is SBA financing which can offer more affordable rates for entrepreneurs in the self-storage industry.
Having a strong business plan in place can increase your chances of securing this kind of financing.
Partnering with experienced investors or working with a capital advisor are also viable options. They can guide you through the time-consuming process of sourcing the funds needed for the entire development budget and estimating construction costs.
Commercial banks as well as some life companies and private lenders can also help bankroll your self-storage project. These institutions typically focus on factors like location potential deal ROI and the soundness of your business plan so be sure to pencil out these details in advance.
Another alternative is buying an existing self-storage facility. This could potentially yield a 20% ROI and provide a track record that can be leveraged when seeking funding for a new facility.
An essential rule of thumb is always read these insights first when seeking funding for your next self-storage development project. Keep in mind that average cost to build storage units can fluctuate greatly from region to region due to costs like materials labor and closing.
Regardless of the funding option you choose the success of your self-storage business hinges on a solid start with adequate funding. So make sure the support you get whether financial or consultative suits your business’s specialties.