Self Storage RockStars! Prime Freeway Land. Your Thoughts Please?

Question

Hello BP Self Storage Rock Stars!

I'm curious to know what you think of this one? What would you do?

We found a 3 acre lot right up against the freeway about (5min from our home) with a farm house on it for $450k. It's located in the hot Boise Idaho treasure valley area. Yes, a little high, but I realize advertising would be built in with freeway access and views. I'm kind of excited about this one after speaking with the owner who's in Colorado, but don't want to jump too soon. I just spoke with the owner and haven't done a full analysis or due diligence yet. Here's a breakdown of the benefits:

1. No agent involved

2. 1600sf farm in overall good shape (new roof, water heater and furnace). Could live in while building, convert to office with accessories or have it moved and used as rental.

3. I live about 5min away

4. Zoned light commercial (need to verify)

5. Price is negotiable

6. Prime Freeway Access about 1/2 a mile from commercial airport

7. Literally right next to Freeway exit

8. Easy access road

9. Over 3 Acres

10. Avg daily freeway traffic volume = 139,000 vehicles

I'm really curious to know what you would do and how to structure a deal, find GC to build, how much on construction, and so forth. Grateful for your feedback in advance!

Paul Moore · Answer

Hey @John Culotta. The first thing I would do is a market study. You can do the informal work on this by using the tools at Radius Plus. You are going to want to confirm that there are less than about 7 square feet of self-storage per person in about a 2-mile, 3-mile, and 4-mile radius around the property. The national average is about 7. If you find that you are higher there, it will be very hard to generate enough demand to make this profitable.

I would recommend that you personally connect up with @AJ Osborne, who just commented above. He could be very helpful to you in this. AJ had a great story about retrofitting a K-Mart in Reno on the BP podcast July 4, 2018. Check it out.

I would recommend that you personally connect up with @AJ Osborne, who just commented above. He could be very helpful to you in this. AJ had a great story about retrofitting a K-Mart in Reno on the BP podcast July 4, 2018.  Check it out.

Michael Wagner · Answer

As valuable as the freeway visibility and access is, you also want to be very mindful that storage is something that folks don't want to go out of their way for...So you'll want to dig into how your location will stack up against the competition not only from an ammenties and price standpoint but also from a "strategic location" standpoint...all other things being equal, its hard to get folks to drive past one facility to get to yours.  Of course it can be done but its an uphill battle.  There's, of course, a lot more that goes into your question here.  My first instinct would be to check the storage rents in the area....I don't know your market well at all but that it a lot of money to sink into land that still needs ground up development before any revenue will be generated.  Typically speaking a basic traditional storage facility will cost $30-35 per square foot to build PLUS the cost of land....on three acres you can fit roughly 45K of storage so you are paying another $10 per rentable square foot. VERY rough math would tell me that (personally speaking here), I would want the property to command a rent of $10 per square foot per year.  That might very well be doable in your neck of the woods but its something to look at.  Of course you also need to look at the supply and demand in the market as well as the "holding costs" associated with 2-4 years of negative cash flow as is typically seen in ground up development.

Hope that helps some! NOt trying to discourage you at all....just looking for potential trip wires so you can jump over them or go around:)!

AJ Osborne · Answer

If you are looking at self storage development what really matters is your competition. How much, where, and at what occupancy. That would determine where or not i would look at the market. Then what can they charge per sq ft per month. That determines at what cost the project will be successful or at all. In storage you are competing with other small businesses so you need to make sure there is enough demand to compete. Hope that helps you getting started!

Jonna Weber · Answer

I would have a sit down with Caldwell P & Z or Canyon County P & Z - depending on jurisdiction. If you are concerned about someone grabbing it before you get your due dilligence done,  get it under contract and have a due dilligence/inspection time frame.  Demand for storage is still amazingly high here in the Boise area...amazing how much stuff people have!

Teri Feeney Styers · Answer

"Here's a breakdown of the benefits: 1. No agent involved" Ouch! @John Culotta A real estate agent (@Jonna Weber) just offered you some excellent and free advice. If not her, there may be a great commercial broker who could be quite helpful to you as a buyer... and generally you don't pay them for that service. A consideration for the house on the site: live-in management / property caretaker. I have actually moved a house before and not sure I ever would again.

Jonna Weber · Answer

@John Culotta thanks so much! Yes,  city and county planning departments are a great source of intel on what can be developed on parcels of land.  In Boise, I have walked in to see them in person multiple times and received lots of information.

Joel Owens · Answer

You need to see what the city or county current and future land use plan is for the area.

If it's not for that you could have a high uphill battle getting variance approvals. So you have the cost perspective, location perspective, asset class saturation level area demands and needs, your desired returns upon stabilization, and what the local muni's and public wants.

Have to get that all working together which is why new development is not easy...lol

Daniel Lioz · Answer

I would jump at the deal, if everything lines up...zoning, flood zones, encroachments, etc.  I would rent out the house while build out is done to get the revenue, the large acreage would support not only self storage, but along the highway some store fronts, may be a gas station, make it mix use to diversify the income.

John Culotta · Answer

@Jonna Weber - that's a great idea. I was concerned about someone grabbing it before I can finish my due diligence. Is it difficult to get an appointment and sit down with a p and z official?

BTW - I recently met with Corby Goade and he had high praise for you and your services. FYI, your sign is down at the hillside property on Braemere Rd 🙂

John Culotta · Answer

@Joel Owens - great information. I definitely have a lot of homework to do. I honestly did not think about all that. Thank you!

Self Storage RockStars! Prime Freeway Land. Your Thoughts Please?

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