Do a supply inventory of storage units in your area. You will see very quickly that they are located on major arterial routes or collectors. Storage units are almost always located in high daily traffic areas as 70 - 85% of their business comes from drive-by's. To get into the business, you will be looking at a very high initial land cost. A lot of the sites that are developed into storage are not currently suitable for commercial and are too small for other industrial uses. Yes, typically a light industrial zoning. There can be some onerous requirements for offsite costs: traffic lights, PAC (permanent area contributions), and ARA (arterial roadway assessments) and other levies may also be subject to the site. Your competition will often own the land they develop so will have substantially lower debt coverage requirements and can consequently charge very competitive rents that you will not be able to cash flow at with more than a 65 - 70% LTV. If you are in a larger center they will likely also offer better incentives than you can match: $1 for the first month, no lease requirements, no DD, free moving van, ect. So you would need to become familiar with these incentives as well and understand that your rents will be less than theirs, and put those numbers into your pro forma.
As far as utilities, a lot of units (even outdoor) offer climate-control (keep temperature in unit around 15 degrees). Electricity is not the only cost.
There are certainly storage units who rent out sea cans or other creative storage arrangements but if you follow the market rents you will see their units have a large discount.
A further challenge is that you need to have sufficient scale. Entry level expectations are security and alarm system, regular office hours (longer if you want higher rents), and custom-access locks. Professional companies will have 24 hour access and there needs to be a system to control and monitor access. So the fixed overhead for operations is quite large as well.
As you can probably begin to see, a lot of the self storage units that are developed that are not by the majors are left over land from a developer building out a neighbourhood and has a very low land cost (probably $0) or long-term land bankers who have held the land vacant for many years. It is a very capital intensive development process.
