Self Storage Feasibility Study in Utah

Utah self storage: a 504 class with a high cancellation floor

Self storage holds a large place in Utah's SBA lending: the location quotient is 2.21x and Utah ranks 8 of 50 among states for storage. Lenders approved 107 Utah storage loans for $146.9 million over FY2017 to FY2026, putting storage 11 of 39 among Utah classes. The median loan is $1.0 million, 1.08x the national storage median, and the quartiles stretch from $380,100 to $2.0 million. In this cell, 504 carries more of the loans than 7(a): 63 against 44. Our screen does not flag any headline figure as apart from both Utah lending overall and storage nationally beyond sampling noise, but the cancellation floor is what a borrower should read first.

Mountain West and the counties

Mountain West Small Business Finance is attached to 53 of the 63 SBA 504 loans, for $80.1 million, and Intermountain Business Lending, Inc. to 7 for $10.8 million. Under 7(a), Mountain America FCU holds 13 loans worth $12.5 million, Live Oak Banking Company 6 worth $11.4 million and America First Federal Credit Union 6 worth $5.9 million. Brands appear on 2.8% of loans. Utah County leads with 19 loans and Cache follows with 13, ahead of Salt Lake with 10 and Davis and Washington with 8 each.

At least 20.4% of the storage projects Utah lenders approved in FY2017 to FY2024 were later cancelled; counting undisbursed loans lifts that to 21.4%, which means a large share of approved projects never went forward as approved. Once funded, the loans have performed: the 58 Utah facilities funded during FY2017 to FY2021 carry no charge-off, a 0.00% floor overall and 0.00% for the early years. Both rates are floors. Lending has faded, from 23 loans and $30.5 million in FY2021 to 4 loans and $1.1 million in FY2026.

What a Utah storage study must settle

With a cancellation floor this high and volume falling, a Utah self storage study has to settle early whether the project will close: land and entitlements, construction pricing and the equity required for a 504 structure. Demand means rentable square feet per person in the trade area, the facilities already open or under construction nearby, and occupancy and rental rate trends, tested separately for Utah, Cache, Salt Lake or Washington County. Cost covers land, buildings, climate control and security. Coverage should rest on a realistic lease-up to stabilised occupancy, carrying the first mortgage and the 504 debenture payment together. Value will rest on income and comparable storage sales. Utah's RV and boat storage yards are a blind spot: they lack a dedicated code, landing either with self storage or with other warehousing, and so cannot be split out.