Self Storage University Podcast: Episode 59

Using Tools To Predict A Location’s Future

In an environment where many of the best self-storage deals are in American suburbs and exurbs it’s critical that you choose locations in the “path of progress” so that your occupancy and rents are always growing with the expanding population in these neighborhoods. But how can you predict the future of a self-storage location? In this Self-Storage University podcast we’re going to review the many tools available to gauge the future growth of a location.

Episode 59: Using Tools To Predict A Location’s Future Transcript

Ever since COVID, the direction of the self storage industry has changed. The money is being made now in suburbs and exurbs and not any longer in those metropolitan areas. People don't wanna have something in those urban heart of town anymore, they're moving away in search of safety and better schools, and a better quality of life and as they go, so go all their belongings. This is Frank Rolfe of the self storage university podcast, we're gonna talk about how to predict a location's future at a time where most self storage buyers are looking a little farther out, no longer looking in the heart of town, they're looking in the suburbs and exurbs, that's where the real opportunity lies, but as you push out, you find that you need to stay focused and you need to predict well on what areas have the brightest future. So the question is, what tools are out there for self storage buyers to help them better pinpoint what areas have most of the promise? Well, here are some tools that are at your disposal, most people don't know they're there, don't think about 'em much, but they're always there for the taking if people only knew to ask for them.

The first one are traffic count maps. Every state, every county and every city has traffic count maps to show the traffic on every road and their boundaries of any major size. It doesn't have residential streets, has almost all your secondary streets, farm-to-market roads, state highways, interstate highways, and those traffic count maps tell you a lot. Not only can you see how much traffic there is in the area in which you're buying that self-storage facility, but also you can tell by traffic count where most of the population is going. On the interstate highway for example, that crosses north to south through the heart of the town, if the traffic count going north is twice the amount of count as you have going south out of downtown, then it would appear that most of the population, most of the growth is going north. So get a copy of this traffic count maps, call your State Highway Department, call your county, call your city, you can easily obtain them. Typically, they're all online, some areas they still have 'em printed, you might want the printed copy so you can stick it to a wall and write other information I'm about to give you on top of that map, but traffic count maps are a fantastic stat, so easy to understand, so easy to read.

Next, you have the book on new road projects. Every state, every county, every city traditionally has a book, in the case of the State, an actual book, that shows where all of the new roads are going. Now it shows them in different tranches because these road projects take a long time to accomplish, so typically it will start off showing what the concept is for the road, and then it'll show when they have a plan for the road, and then once the plan's approved it goes into buying right of way, then once they buy the right of way, then they have a bidding process to pick a vendor to build the road, then the road gets built and then it opens. It's a very lengthy process, in fact, on average, it probably takes most major roads five to 10 years from beginning to end, but you can tell a lot by looking at all the roads that are already in the status in that assembly line of where they stand. So if there's a road in there that's already the right of way purchase point, then that means that will definitely be a future road, and that means in the future there'll be development, and there'll be more traffic and all kinds of great things for self-storage could come up from that.

So get a copy of all that new road information, it's imminently accessible, it's in the public domain, it's not private information, you can get that and you can map out, you can literally draw on a map where all those new roads are going, and you can quickly see where the future is as far as growth, because you only build roads where there's gonna be more people and more things being built. Next, you can map out new business openings and closings, go to the Chamber of Commerce in the area in which you're looking at that self-storage facility, and just get a list of everything that's opened in the last 12 months or so, versus everything that's closed, and once again, you can pretty rapidly see exactly what's going on. If you see all these little dots you put on the map of openings, and they're all east of downtown, and then you see all these closings and they're all west of downtown, well, you definitely wanna be going east, that's the direction where the future is.

0:05:00.1 S2: Also, you can map out water and sewer line infrastructure. Now, what will that get you? Well, if you want to build houses, if you wanna build a subdivision, you have to have access to utilities, and municipal water and sewer are at the top of that chart. So if you know where those lines already exist, then you know pretty well where the building will commence. And it's very expensive to build water and sewer lines, just like the new highway book, it tells you where those are going, water and sewer lines are also a big capital investment, there's a lot of planning that goes into that. Now, where do you get that information? Well you're gonna need to talk to the municipal water and sewer district on where their water and sewer lines are. They typically have maps, online maps you can get of those, or they can sometimes even tell you. If you find an area that has massive water sewer infrastructure, that almost guarantees and will also have a massive population growth, because wherever there's water and sewer, it's there, it's been pre-planned to be there in advance of residential development, so you're gonna pretty rapidly see the future just for that water sewer map. Areas that have very little growth, or I can only handle very little growth, they typically don't put in which water sewer.

Why would they? Why waste the money, if you can't really build anything out of... There's no demand for it. However, areas that have high rates of growth, you'll see they always have water sewer projects going on over drive out somewhere, and you see all this digging along the high way, people put in big pipes and stuff, those are areas that are growing and they're laying that well in advance, and if you go back and revisit that five years later, you'll see those areas enough solid subdivisions. Next, you can look at housing stats, just like those water and sewer line to tell you the future of housing, well housing stats is even better to determine what's going on. Again, talk to your Chamber of Commerce or find out who tracks housing stats, and look where all of those new houses are going, look where all those new subdivisions are located, they're not hard to find, are typically built by large developers, people like Pulte Homes. When Pulte is gonna go out and build a 600-house subdivision, then you better know there'll be copycats surrounding even that, and they're not gonna take a big gamble like that unless they feel population is definitely heading that way.

So study where all of those new house subdivisions and where all this new housing stats are, also look at single-family home prices, you can go on Zillow, any number of websites today, and you can see what houses are going for, and you clearly know that wherever they're the most expensive, that's where the people wanna live the most, and once again, you're going to find that those houses tend to congregate, so if you're looking at a city and it has a $150,000 average home price and you're looking at a suburb, it just got a $250,000. Well, you know that's a very desirable suburb, that also implies those people will have lots of goods to store 'cause they've got more wealth than other people, so they probably buy more stuff, they can also therefore handle the monthly price of paying to store all that stuff.

Now, the big conclusion of all this is if you take everything I just mentioned and you stick it all on a map, every single item, traffic counts, new road projects, business openings and closings, water and sewer line infrastructure, new housing stats and single-family home price, you put that all in one big map on your wall, you will be able to predict like a wizard where the future goes, there's no way you can screw this up, it all aligns, all those things to always tie together.

There won't be any anomaly, you won't say, Oh, well, this is strange, everything points to north of town, but now suddenly look, I'm seeing big road development south of town. No, you will never see that. When you lay out all these little items, it will be so clearly visible to you, they will make a very compelling case, and that way you'll be able to only buy or look to buy self-storage facilities in those areas that have remarkable promise as far as growth, and underpinnings, everything that you would want in a self-storage market, and you can locate those in advance of everybody, if you simply take note of all the items I've discussed. This is Frank Rolfe off the Soft Storage University podcast. I hope you enjoyed this. Talk to you again soon.