Let's talk about self storage.

Hi all,

Currently have about 45,000 sq ft of land in downtown Houston and was trying to crunch some numbers to see if building a climate controlled self storage unit is worth it. Would love to hear some outside perspectives on what I might be missing. A few assumptions I've made

• 3 story unit or about 100,000 of building sq ft (not rentable) at $75 a sq ft so $7.5M to build.
• Commercial loan of $7.5M at 5.8% interest rate for 30 years = $574K a year 
• ~2% property tax on a $9M assessed value (building + land) = $180K a year
• 2M kwh electricty at $0.07 = $140K a year
• $115, average unit rent, 5% growth rate in rental rate every year

By my calculations it'll take about 4 years to break even again. Are these reasonable assumptions?

------------------------------
Kevin Gwen
Manager
Houston TX
(832) 819-3883
------------------------------

The tighest project I have been involved with was in Stoneham, MA. It is owned by a REIT and is on I-93. The land was dead on 1 acre to the foot. With everything we dealt with the largest footprint we could make was about 25,000 SF. So that project went to 5 levels. To suggest you are getting 100,000 SF, in my opinion, will be tough without going to 4 or 5 floors. 

We are still underwriting deals in the very high 6's and low 7% range. Also, 25 year AM is more typical. If you can get better terms, that is great. If you are looking at an SBA you will pay a higher interest rate. You will need to figure in Negative carry for 18 months of operation and the 12 months construction time. If you cannot lease up to stabalization (choose any number) in 36 months it is too slow. 

Houston is deregulated for Power, so you will be shopping it. However, all of our properties with energy brokers are up. I am not sure why. Your energy cost projection is way too high. 

You are using a per unit average rent. Backing into your 715 units, I assume that is 100 SF per unit on average. The only person that can answer that is the market and we would need to dig deep. You can buy reports, but I seriously don't trust them. Others do and that is ok. However, you will have WAY TOO MANY small units in this case. Just today from a national group and a 10 property owner, they both hammered 5x5 units. 

Regarding other anticipated expenditures, 10 different groups will give you 10 different opinions. Some will tell you not to use managers, Some will tell you advertising is $20K, others will tell you depending on automation will drive your operational costs. Expenses are driven by management style. 

Also, who is managing it. A REIT would be glad to take another large project and have you absorb 100% of the cost with zero risk on their part. They have no vested interest. So what type of company will be looking for. 

Regarding the Construction, there are great contractors out there and great steel suppliers. I can make as many introductions as you may want. 

Overall -- you have made a good start, but if you have not had a consultant do a full feasibility study, I would suggest you look for options. 

Donald Jones Consulting can do anything you want. Competition Analysis, Feasibility, Help with design, Owners Rep, Property Management and we always have your best interest in Mind. We are in the Vendors List and available to help. 

------------------------------
Donald Jones
Owner
Donald Jones Consulting & Service
Keller TX
(817) 676-5574

Original Message:
Sent: 02-09-2026 11:42 AM
From: Kevin Gwen
Subject: Breakeven Cost

Hi all,

Currently have about 45,000 sq ft of land in downtown Houston and was trying to crunch some numbers to see if building a climate controlled self storage unit is worth it. Would love to hear some outside perspectives on what I might be missing. A few assumptions I've made

• 3 story unit or about 100,000 of building sq ft (not rentable) at $75 a sq ft so $7.5M to build.
• Commercial loan of $7.5M at 5.8% interest rate for 30 years = $574K a year 
• ~2% property tax on a $9M assessed value (building + land) = $180K a year
• 2M kwh electricty at $0.07 = $140K a year
• $115, average unit rent, 5% growth rate in rental rate every year

By my calculations it'll take about 4 years to break even again. Are these reasonable assumptions?

------------------------------
Kevin Gwen
Manager
Houston TX
(832) 819-3883
------------------------------

Hi all,

Currently have about 45,000 sq ft of land in downtown Houston and was trying to crunch some numbers to see if building a climate controlled self storage unit is worth it. Would love to hear some outside perspectives on what I might be missing. A few assumptions I've made

By my calculations it'll take about 4 years to break even again. Are these reasonable assumptions?

------------------------------
Kevin Gwen
Manager
Houston TX
(832) 819-3883
------------------------------

Quick reminder that it is essential that all Texas Self Storage Association members avoid any possibility of violating antitrust laws. That includes in person and through this forum. While the information shared thus far is vague and assumed, it can quickly escalate. We need to avoid sharing any specific pricing, bidding or detailed cost information (such as rental rates, labor rates, vendor pricing, overhead, etc.). That type of data can be considered competitively sensitive and can create antitrust concerns.

Let's keep the discussion at a general industry level and avoid specific numbers.

Hi all,

Currently have about 45,000 sq ft of land in downtown Houston and was trying to crunch some numbers to see if building a climate controlled self storage unit is worth it. Would love to hear some outside perspectives on what I might be missing. A few assumptions I've made

By my calculations it'll take about 4 years to break even again. Are these reasonable assumptions?

------------------------------
Kevin Gwen
Manager
Houston TX
(832) 819-3883
------------------------------

Quick reminder that it is essential that all Texas Self Storage Association members avoid any possibility of violating antitrust laws. That includes in person and through this forum. While the information shared thus far is vague and assumed, it can quickly escalate. We need to avoid sharing any specific pricing, bidding or detailed cost information (such as rental rates, labor rates, vendor pricing, overhead, etc.). That type of data can be considered competitively sensitive and can create antitrust concerns.

Let's keep the discussion at a general industry level and avoid specific numbers.

Hi all,

Currently have about 45,000 sq ft of land in downtown Houston and was trying to crunch some numbers to see if building a climate controlled self storage unit is worth it. Would love to hear some outside perspectives on what I might be missing. A few assumptions I've made

By my calculations it'll take about 4 years to break even again. Are these reasonable assumptions?

------------------------------
Kevin Gwen
Manager
Houston TX
(832) 819-3883
------------------------------

Hi all,

Currently have about 45,000 sq ft of land in downtown Houston and was trying to crunch some numbers to see if building a climate controlled self storage unit is worth it. Would love to hear some outside perspectives on what I might be missing. A few assumptions I've made

By my calculations it'll take about 4 years to break even again. Are these reasonable assumptions?

------------------------------
Kevin Gwen
Manager
Houston TX
(832) 819-3883
------------------------------