Key Ingredients for Selecting a Successful Self-Storage Market

Since our founding in 2013, everything we do at Spartan Investment Group focuses on mitigating risk for our investors and ensuring they have access to the best investment opportunities. An important part of making our mission a reality involves thoroughly scrutinizing the markets we plan to enter. 


In this blog post, we outline the key ingredients our team searches for to determine if a market is feasible. 



When evaluating new self-storage opportunities, the first thing our acquisitions team looks for is strong demographics. Relevant to any asset class, data points such as unemployment rates, household income, population and income growth, and net migration play an essential role in determining whether or not the investment opportunity will be successful.


Unemployment Rates

When considering new markets, our team reviews County- and MSA-level unemployment data—a key indicator of economic conditions—to ensure we develop a localized understanding of the area. Generally, we seek out markets with unemployment rates that have remained below state and national levels for a sustained period of time. As COVID reigned throughout 2020, this was a particularly insightful metric in understanding market resiliency.


Population and Income Growth

Similar to unemployment, state and national growth rates serve as a good benchmark. If a local market’s population and income growth rates exceed national averages, it is likely a good location for self storage. For example, many of the markets we buy in—such as the North and South Carolina markets that constitute the Go Store It portfolio—have population growth rates upwards of three or even four times the national average. 


How do high growth rates translate to success? A quickly growing population exacerbates self-storage demand, especially in low-supply markets. Income growth, on the other hand, is a useful data point for an operator to understand how achievable their rent growth assumptions are. Ultimately, high income growth can reduce demand elasticity as rates are pushed over time.


Net Migration

Net migration data offers a slightly more macro perspective and allows us to take a step further to develop a holistic market narrative. Paired with other demographic data, strong net migration figures help us conclude whether a market is attractive or not.


At SIG, a majority of facilities we purchase are located in the top 10% of high net migration counties within a state. These figures indicate that there is some sort of activity drawing people to the region, thereby increasing demand for goods and services.


Housing and Employment

Once we have an initial understanding of a market’s demographics, our team digs deeper to identify housing and employment trends. 


Stable Employment

Stable local employment is arguably the crux of a strong market. Having well-established and growing employers is imperative in establishing whether a market can maintain its vitality and growth. 


In larger primary and secondary markets, there is generally a diversity of established companies, allowing one to become comfortable with this aspect of analysis relatively quickly and easily. However, in smaller tertiary markets it is particularly important to the local employment dynamic. 



Case Study 1

Spartan recently purchased a facility in Fort Valley, Georgia—a small market located approximately 90 miles outside of Atlanta. The largest employer in town, by and far, was BlueBird Inc., a school bus manufacturer. We initially had concerns about the local economy being supported largely by a single entity, especially given the pandemic-induced school shutdowns and the uncertainty of when they would re-open. Since BlueBird is a publicly traded company, our team was able to dive into its financials to understand its historical performance, how COVID impacted its key financial metrics and any evidence of future growth plans. Ultimately, this extensive research helped SIG mitigate concerns and boosted our confidence in entering the market.



Case Study 2

Similarly, SIG recently acquired a facility in Havelock, North Carolina, where the local economy is largely dependent on Marine Corps Air Station Cherry Point. While military bases do not typically provide rapid job growth like some private sectors, they do offer a stable, diverse and federally-backed source of employment. Military bases serve as a diverse economic ecosystem, often contributing billions of dollars of economic impact to the surrounding region, and for the most part are there to stay. In addition, MCAS Cherry Point was particularly attractive because it recently broke ground on a multi-year $150 million hangar expansion project—bringing new jobs to the area and thus increasing the base’s population. 




Last, but certainly not least, it is important to understand if new housing developments are planned in a market as it directly translates to increased self-storage demand. New housing developments, specifically apartment units, often have limited space—forcing residents to either downsize or seek out additional space. The obvious solution? Self storage.


Determining the viability of a market for a self-storage project is an art as much as it is a science. While some markets check all of the above boxes, many don’t, but some merits outweigh the lack of others. Developing a deep understanding of the local market dynamic allows you to determine the feasibility of your project, and fine-tune your assumptions and business plan accordingly.

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