Investment in Self Storage: Is It Worth It? A Guide for Investors
Investing in a self-storage facility is becoming an increasingly popular option for entrepreneurs seeking stable and profitable ways to allocate capital. What are the costs associated with such a venture? Is investing in this type of storage facility profitable? Let’s take a closer look at the profitability of self-storage and what should be considered before making a decision.
- Investments in self-storage facilities are gaining more attention, especially in countries where they previously weren’t very popular.
- Operational costs for self-stora storage facilities are relatively lower compared to traditional commercial properties.
- Before making an investment decision, it’s worth learning about the differences between indoor and outdoor storage units.
- The cost of investment depends on many factors: location conditions, permits, facility size, type of units, security standards, and offered amenities.
- The minimum return on investment (ROI) in self-storage is around 5-6%, but more commonly, the result reaches double digits.
- Starting a self-storage business can be a good option for those looking for stable and profitable ways to invest their capital.
Investment in Self-Storage – A Great Business Idea
The growing demand for storage space makes self-storage facilities an increasingly attractive investment. Self-storage is unique because its services are targeted not only at businesses but also (and perhaps primarily) at individual customers (54%) (1).
Fast-paced lifestyles, frequent relocations, or the need to store excess belongings without having to move to a larger apartment drive people to rent units. For investors, this means stable rental income. The attraction of self-storage lies in its lower operational costs compared to traditional commercial properties, along with higher rental income per square meter.
An important aspect – you don’t need to build a large facility right away. With a smaller budget, you can start with just a few containers and gradually add more segments. The ability to develop storage facilities in phases lowers the entry barrier to this business.
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Contact UsWhat You Need to Know Before Making a Decision
- What will the total construction and finishing costs be? Does my budget cover all stages from design to completion?
- What are the costs of purchasing land or leasing it? Or do I already own a plot or a warehouse?
- What are the costs of equipment and technology? What security and management systems should I include?
- Should I invest in indoor or outdoor self-storage? Or do location conditions dictate the choice?
- What permits will I need?
Storage Units or Containers?
Indoor self-storage facilities are enclosed storage spaces located inside buildings, often large warehouses. Tenants’ belongings are protected from weather conditions and typically benefit from advanced security measures.
Outdoor storage, on the other hand, consists of containers on fenced lots that can be accessed directly by vehicle—ideal for those who value convenience and ease of access. Each type of storage has its pros and cons and requires different levels of investment. The construction cost also depends on what resources you have to begin with.
Storage Unit Manufacturers
The Polish market is home to several renowned manufacturers of storage units and containers dedicated to the self-storage industry (Silesia Box, Procontainers, Steel Art), which greatly facilitates the planning and execution of investments in this sector. These companies offer a wide range of solutions, from standard modular units to containers with enhanced thermal insulation, suitable for any location regardless of weather conditions. Moreover choosing a reliable supplier also enables faster project completion, translating into earlier revenue generation.
Key Investment Factors Comparison
| Factor | Indoor Storage | Outdoor Storage |
|---|---|---|
| Initial Cost | Higher, due to facility construction and advanced systems | Lower, thanks to simpler construction |
| Security | Very high, monitored and controlled | Variable, depending on location and construction |
| Climate Control | Suitable for sensitive items | Usually absent |
| Offer Range | Greater variety, from small lockers to larger units | Limited to larger containers |
| Market Segment | Private clients valuing security and proximity | Entrepreneurs requiring easy access |
| Scalability | Limited | Easily scalable by adding or moving containers |
How Much Does a Self-Storage Facility Cost?
Before deciding on an investment in a self-storage facility, it is necessary to understand all the costs associated with its construction.. These costs depend on various factors, including location conditions, facility size, unit types, security standards, and additional amenities. It’s also a good idea to explore financing options, such as investment loans.
Assuming the land or building is already prepared, the approximate net costs for setting up a small storage facility are as follows:
- Foldable container 3 m²: 5,900 PLN
- Foldable container 12 m²: 8,800 PLN
- Box system 4 x 3 m³: 12,400 PLN (1)
However, these are obviously rough estimates. Larger facilities often offer room for negotiation and cost reductions. The quality of materials and additional features like electronic locks with access control significantly affect pricing. Investing in higher-quality solutions often results in lower operational costs later.
Additional Costs to Consider Before Construction:
- Architectural design (if required)
- Electrical connections and lighting
- Automated gate systems
- CCTV monitoring installation
- Ground reinforcement
- Property fencing
Profitability of Self Storage – What You Should Know
Current rental rates indicate strong demand for storage units. According to the 2023 Fedessa Report (Federation of European Self Storage Associations), the average annual net rental price per square meter is 286 euros in the EU. Owner sentiment is also optimistic, with 96% expecting rental rates to rise or remain stable. Meanwhile, the average occupancy rate is 78.5% across the EU (2).
If you’ve evaluated your investment costs and expected revenue, it’s time to answer the question: Is self-storage a profitable business? Our answer is: yes, provided you establish solid foundations and a clear plan. The minimum return on investment (ROI) in self-storage is approximately 5-6%, but more commonly, it reaches double digits (3). This makes the business more profitable than other commercial real estate investments. However, success depends on location and effective management.
Facilities near major cities in rapidly developing neighborhoods have higher potential for faster occupancy and higher rental prices. Cost reduction through operational automation—such as online unit rentals—can also be invaluable. Tailored solutions, like those provided by SavvyLockers, ensure efficiency and ease of management.
Investment in a Self-Storage – A Step Toward the Future
The growth of the self-storage market is evident worldwide, especially in countries where the concept is still emerging. Increasing awareness of this storage option, rising societal mobility, and e-commerce development all contribute to the growing demand for such services. Investing in self-storage is not only a way to generate passive income but also an investment in a market with great potential.
The self storage business offers promising and forward-looking investment opportunities. It’s also an excellent choice for a supplementary business. Although initial costs might seem high, proper planning and a well-thought-out business strategy can yield a satisfying return on investment.
Sources: (1) https://procontainers.eu/storage-containers/, (2) https://www.fedessa.org/resource/fedessa-european-industry-report-2023.html, (3) https://praktycznieopieniadzach.pl/inwestycja-w-nieruchomosci-self-storage/
Want to Learn More About the Self-Storage Business?
Get in touch with us! If this topic caught your interest, it’s just the beginning! We have years of experience in the self-storage industry and operate our own self-storage facility. We’re happy to share our expertise, answer your questions, and guide you on how to start your own business. Call us, write to us, or leave a message – together, we’ll create a plan to help you achieve success!