When it comes to choosing the right land lease site for container storage projects, the numbers need to make sense. Container HQ uses a straightforward yet reliable approach to evaluate potential markets by focusing on two key metrics: land lease cost per square foot and price per square foot for a 10×10 storage unit. Here’s a closer look at how this strategy helps identify viable markets, with real-world examples to demonstrate its effectiveness.
The Key Metric: Land Lease vs. Storage Rate
The core metric Container HQ relies on is comparing the land lease cost to the rental income from storage units. Specifically, if the land lease cost is less than 5% of what can be earned from renting a 10×10 unit, that market is considered promising.
This simple formula serves as a first filter for evaluating land, providing a quick way to assess whether leasing or buying land makes financial sense. It’s a particularly useful approach for high-demand markets where land prices are steep, but leasing could offer a more viable path to profitability.
Real-World Examples: Honolulu vs. Los Angeles
Let’s break down two examples from current projects:
• Honolulu, HI: Land in Honolulu is expensive, but Container HQ is pursuing the market because the land lease cost is just 4% of what can be charged for a 10×10 unit. High storage rates and strong demand, combined with limited new construction, make this market a prime target. The lower land lease percentage allows for greater profitability despite the high land costs, making it a great opportunity.
• Los Angeles, CA: Los Angeles presents a different challenge. Here, the land lease cost is closer to 7% of the storage unit income, which makes it less attractive. However, Container HQ is still working with the numbers to see if the market’s high demand could compensate for the higher lease percentage.
This method helps zero in on high-rent markets where leasing is more financially feasible than buying, especially when there’s limited room for new construction and storage demand is strong.
Why Leasing Beats Owning in High-Cost Markets
In cities like Austin, TX, where land prices soar above $1 million per acre, leasing becomes the smarter option. If you can lease land for less than $3,000 per acre, the numbers start to work in your favor. Instead of tying up massive capital in land purchases, leasing allows businesses to focus on cash flow, keeping upfront costs low while maximizing long-term ROI.
Leasing instead of owning also frees up resources that can be reinvested into the business. When it’s all about cash flow, owning the land becomes less critical to generating income. The strategy here is to keep initial investments lean while still reaping significant financial rewards over time.
Using Smart Metrics to Identify Profitable Land Lease Sites
Evaluating land lease sites for container projects doesn’t have to be complicated. Container HQ has found success by focusing on a simple yet effective formula—comparing the land lease cost to storage unit income. If the lease cost is less than 5% of the storage income, the market is likely worth pursuing.
This approach not only helps identify high-rent, high-demand markets but also allows businesses to avoid tying up capital in land ownership. The result is a leaner, more flexible business model focused on cash flow and long-term profitability.Interested in learning more about how Container HQ selects the best land lease sites for container storage? Contact us to explore how this strategy could benefit your business.