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Chicago Area Self Storage Valuation - Commercial Appraisal Considerations

Article:
(This archived article was published in 2013.  More recent data is found in the articles section of our web site). When the self-storage facility trend started in the 1960s and 1970s, most of the facilities were constructed on cheap land, often in industrial parks. Newer self-storage facilities are now almost always built on commercial thoroughfares. When appraising self-storage facilities it is important to consider the long term competitive strength of the property in the marketplace. Prior to 1997 cost was the primary driver affecting the choice of a mini-storage facility. According to the 2010 Self-Storage Almanac, the three primary drivers today are safety, curb appeal and convenience. About 75% of storage customers live within 2 to 5 miles of their unit. This figure can vary depending upon whether the site is more urban or rural. 85% become aware of the facility they want to use based upon drive-by traffic. If you aren't on a commercial roadway very few people would drive-by and see you. Surprisingly a high percentage of decision makers that select a self-storage facility for use are women. The 2007 Mini Self-Storage Messenger indicated as many as 85% of the primary decision makers in the facility selection process are women. Other sources site numbers from 60-70%. From a security perspective most women would prefer to be using a facility that has high visibility from street traffic where they can feel safer. Driving into an isolated industrial park certainly would not have as safe a feel as one on a commercial roadway. Over time the industrial park self-storage facilities may become increasingly marginalized as more main street facilities open up. With about 75% of the self-storage market going to residential customers, it is hard to see how effectively poorly located facilities in industrial areas will be able to keep up with its better located competitor on a commercial street. Self-storage success and occupancy rates are very local and can be dramatically different with locations only 5 or 10 miles away. This is particularly true in the Chicago self-storage market. When appraisers are looking at occupancy statistics in their target market it is important to consider any differences based upon commercial site versus industrial site locations. Many areas are still showing strong occupancy rates in industrial areas but it is a factor to keep an eye on.

J. Chie, Esquire

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