Do you want to know how much it cost to build a mini storage unit? If YES, here are 7 factors that determine the cost per square foot to build a mini storage.
The average cost of a pre-engineered mini storage building ranges from around $25 and $40 per square foot. That price includes the complete assembly kit and materials, foundation, delivery, and installation/construction of the building. Electrical, plumbing, insulation, and customizations could add another $20 to $40 per square foot. A multi-story building may cost as much as $70 per square foot.
Factors That Influence The Cost Of Building a Mini Storage Unit
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Price of steel
When it comes to the building itself, one of the bigger variables is the price of steel, which fluctuates dramatically sometimes. Politics have played a major role in U.S. steel prices since 2017. Forecasts for 2023 indicate stabilization in the market. However, don’t expect a price quote to be good for more than 3 to 6 months.
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Location
One of the biggest costs when building your mini storage business is going to be the cost of land. In general, you can expect to spend about $1.25 per square foot of land you buy. However, experts estimate land costs to be closer to $3.25 per square foot.
But remember you will also only use about 45 percent of the land purchased for your storage unit, so the cost of land can also be looked at as $6.82 per leasable square foot.
Another major factor in what you will pay depends on the area in which you build your storage unit. The Self Storage Association reports that currently, 32 percent of storage units are in urban areas, 52 percent are in suburban areas, and 16 percent are in rural areas.
Note that the rate you charge customers will also depend on rental prices in the area. Reports have it that most storage units charge the same amount of rent per square foot as the area’s average apartment does. Furthermore, you can offset your land costs by building a multi-level storage unit.
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Cost of construction
Before you can even start construction, whether, from the scratch or pre-engineered, there will be land development costs to ready the site for building. Depending on how much excavation, clearing, and draining is required, you should expect to pay about $4.25 to $8 per square foot.
Once you begin construction of the building, if you are going to build single story units, you can expect to pay $25 to $40 per square foot you build.
If you want a multi-story building, costs will be around $42 to $70 per square foot. Experts estimate the most high-end self storage facilities have somewhere between 60,000 and 80,000 rentable square feet and cost $45 to $65 on construction per square foot.
The cost of construction will also depend on the unit’s amenities, such as if the unit is climate controlled. Climate controlled units keep temperatures from dropping below 55 degrees or rising to more than 80 degrees, and while they cost more to build and operate, they can attract more customers.
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Marketing Costs
If you are a new business, you will have to attract customers, whether you do so through billboards, mailers, Internet ads, or another method.
Irrespective of the way you choose to market your business, you should plan to spend about 6 to 8 percent of your gross annual income on marketing. If you are not sure what your annual revenue will be, you can estimate it using the following statistics from the Self Storage Association:
- The net average monthly revenue for a non-climate controlled unit is $1.25 per square foot.
- The net average monthly revenue for a climate controlled unit is $1.60 per square foot.
- In 2019, storage units averaged a 90 percent occupancy rate.
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Franchise Fees
If you intend to leverage a franchise company, you may avoid some of the marketing costs since the company will already have a reputation in the community.
However, you will then face franchise fees and perhaps royalties. For instance, Zippy Shell, a storage company that offers franchises, requires an up-front fee of $60,000 plus royalties from every rental. Another franchise option, Big Box Storage, sells franchises for $45,000 but does not state they require royalty payments.
Note that Franchise fees will vary from company to company, as will royalty fees, so it is best to contact the company directly to determine exactly what is required to open one of their businesses in your area.
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Operating Costs
According to The Self-Storage Expense Guidebook, operating costs for storage units average $3.78 per square foot. Reports give the range for operating expenses as about $2.75 to $3.25 per square foot, with the numbers varying due to salary costs in different markets. Operating costs will also increase if the units are climate-controlled.
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Additional cost factors
- Poured concrete foundation ranges from $4 to $7 per square foot.
- Labor costs vary according to location and average salaries in your area but average between $2 and $6 per square foot.
- Insulation ranges from around $0.40 to $2 per square foot, depending on the type.
- Customization and add-ons increase the price of your steel storage building. Popular options include solar panels, windows, skylights, vehicle and walk doors, and finishing options such as stucco and brick.
When it comes to land for your facility, you typically use less than half of it for the building itself. The rest is driveways, walkways, parking, office space, etc. Buying land for your steel mini storage building typically accounts for around one-quarter to one-third of your total development cost.
For a businessperson wanting to start up a new self-storage facility, they would have to have the financial clout (or investor support) to be able to finance the land purchase and the construction costs. Typical projects require financing of $2 to $3 million with a 10 to 20 percent down payment.