Is Self Storage Commercial Or Industrial?
Traditionally, self storage is considered a commercial real estate asset, but let’s dive into why that’s the case and how it meets the criteria.
What is industrial real estate?
Industrial real estate typically refers to properties used for manufacturing, production, distribution, or storage of goods on a large scale. These properties make a profit through making, storing, and transporting goods. Think factories, plants, and warehouses. These properties often have special features—like loading docks, heavy machinery, and high ceilings—to facilitate industrial operations.
What makes commercial real estate different?
Commercial real estate, on the other hand, refers to properties used for business purposes, including office buildings, retail spaces, and storage facilities. These properties make profit through capital gain or rental income. of the property itself. Self storage facilities fall under the commercial real estate category because self storage units are primarily rented by individuals and businesses for personal or commercial storage needs—not for high volume manufacturing and distribution of goods.
Working out is self storage commercial or industrial is understandably confusing. After all, a self storage facility may have some industrial features, like a spacious warehouse-like structure, right? But its main purpose is to provide secure and convenient storage space for customers to use, not the owners.
Why knowing your property classification matters
There are a few good reasons why you need to understand the classification of your self storage property, including the following:
Zoning + Regulatory Compliance
Municipalities often have different (and very specific) zoning regulations and requirements for different property classes. Understanding the classification of your property will help you comply with your local zoning laws and regulations. It will also help you ensure that your facility adheres to any applicable restrictions or guidelines.
Investment + Financing
Your property’s classification can influence its value and attractiveness to potential investors or lenders. Commercial properties often have different valuation metrics and financing options compared to industrial properties. Knowing your asset classification helps you navigate the self storage investing and financing landscape, and allows you and your investors to make informed decisions about expansion, renovation, or acquiring new facilities.
Marketing + Target Audience
Knowing the classification of your self storage property helps you determine your target market and develop appropriate marketing strategies.
The classification of the property impacts operational aspects of your business. For example, as a commercial property, considerations include tenant management; amenities and services to attract and retain renters; lease admin like rent collection, renewals, and handling complaints/disputes; and maintenance to ensure a safe space for tenants and visitors.
Industrial property owners, on the other hand, must consider operational issues like equipment and machinery, logistics and supply chain management, and industry safety regulations.
Finally, self storage facility is considered essential terminology for operators to comply with regulations and effectively target their marketing effectively.
In summary, self storage is considered a commercial real estate asset class, catering to individuals and businesses seeking secure storage solutions, while industrial real estate is primarily focused on large-scale manufacturing, production, and distribution activities.
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