Feasibility Studies

What is a Feasibility Study?

A Feasibility Study is a detailed report that provides a complete analysis of a property’s economic feasibility for a proposed use, in this case self storage. The report provides the property owner(s) a valuable tool to take to their bank when pursuing financing for the project – most banks will require a feasibility study be performed. The report analyzes specific areas that are essential for a successful self storage facility.

Why is a Feasibility Study important?

These reports are important for several reasons:

1. It provides the owner(s) with either a valid analysis of a potentially successful project or the information not supporting the proposed project.
2. It is a working tool for the owner(s) to use with their bank, as well as various contractors to use in developing a self storage project.

What is included in a typical Feasibility Study?

A Feasibility Study takes into account various elements of a proposed project:

Proposed Site Examination

As with any retail business, location is the key essential for success. We provide a general opinion of the site commenting on the site’s location, visibility, drive-by traffic and local exposure, topography, building layout and design, and the property’s overall suitability for self storage construction. This section will include property photographs, location maps, and a unit mix layout within the building footprint.

Demographic Analysis

Demographics can often be confusing but are as important as visibility and drive-by traffic to the success of a self storage facility. A complete demographic report detailing population and associated statistics with an explanation and analysis of the data is included in the study.

Competition Analysis

This section presents information on the competing self storage facilities in the immediate market. It contains individual rent comparables with sizes, prices, square footage, units, occupancy, features, pictures and maps for each competitor. Also, included are a rent comparable summary, overall rent comparable map, and an opinion on the overall competitive rental market.

Supply and Demand Analysis

In this section we pull information from both the demographics as well as the competition section to make a determination of the approximate demand in the designated market area. We take population in various radii of the subject property and then take the total supply of the self-storage square footage in these same radii. Using a demand multiplier based on regional averages, household numbers, population and taking into consideration the overall average occupancy of the competing facilities, the area’s self storage supply is analyzed to determine if the market can sustain the new storage provided by the subject property. Already proposed self storage projects are also considered in this analysis.

Financial Projections

All previous sections are considered to predict the length of time required to lease the available space in the subject property. In this section, we create a comprehensive development pro-forma for the owner, which is a valuable tool used by the banks. This information is used to develop month-by-month cash flow analysis through the lease-up period. Other financial factors and investment return analyses are included in the Executive Summary.