Had a new investor ask how to avoid large REIT competition when selecting their first Storage location.

Lets understand their "normal" business model first:
a. Onsite management, lowers their margins and causes increased prices.
b. Climate controlled, which is cheaper if you build multi level versus single. Also because the land is more expensive in larger cities.
c. Now lets work back wards. Lets say a location for them has to be at least 350 units to make it worth it.  Change the number as you see fit.
d. I use a ratio of 6 units per 100 population, not houses.
e. Minimum 350 units at 6 per 100 people = 350/6x100= 5,800 people. That assumes no one has built there already.
f. Problem with a town of 5,800 people is that market does not want or need controlled climate at those prices. In a large city they are forced there because the land is too expensive to build one story drive up. So even though the math says 5,800 minimum size that isn't correct.
g. Now at what price does the land become so high, that: 1. You are forced to build multi story (not $50,000 per acre, because I'm happy to build drive up at that price. $100,000 per acre, I would still build drive up.) Lets leave it at $100,000 per acre city property.; 2. REIT Customer base has to be willing to pay around 10x10 $110; 10 x15 $140 per unit. The city has to be large enough to where they can't drive easily beyond 1 to 2 miles to get to drive up storage. To me that is a town of around 100,000 people.
h. There is your answer. Look for towns of less than 100,000 people which is a market for 6,000 units. And Commercial/Industrial land prices of $100,000 or less for 2 acres or more.

Now lets test that approach:
1. Go to sparefoot and pull up a town of 100,000 to 50,000; don't worry about below, REITS won't get to 25,000 population towns. See which large National or Regional REITS are there. Sort by Distance. Storage 5 miles away is not your competition.
2. Do the same thing using Google search for self storage in that town. Look by distance also.

Look for large locals. Same impact as REITS in a smaller city/town. Also just because there is not a REIT there, there could be too many local locations. I love REITS, can beat them on price, convenience (drive up versus elevator), "larger" size offering, different product (climate versus non-climate) and location. Don't play their business model.  Don't be a castle (large customer base or circle needed), be agile and mobile.  If you can buy the land/zoning; if there are 4 large National or Regional REITS within a mile of each other and they are stabilized at 70% full, build between them; its a great location.  You will be at 90% occupancy.

But as many have said, know your numbers. It's about you, not them.

"Start small and Make Your Big Mistakes Early"