Occupancy • Section 5
cess of their facilities. To sum it up in simple terms: Rising rates are considered a sign of a healthy storage business while falling rates can indicate an unresolved operations problems at a self- storage facility.
O Factors such as marketing campaigns, facility maintenance,
and staffing issues are generally among the first areas investi- gated as the potential source of occupancy challenges or suc- cess. However, occupancy can expand and contract based on a variety of forces, many of which have little to do with the day-to- day operations of a self-storage facility. Conditions outside an owner’s or operator’s control—such as a declining local econ- omy or an oversaturated market area—can significantly strain occupancy rates.
Occupancy data can provide a window to
demand for individual unit sizes. For example, a store with an occupancy rate of 80 percent may want to run a special to attract new
customers. However, after further examination of unit-by-unit or square footage occupancy rates, the operator might discover that there is only excess availability in large-sized units at the property, for example.
External forces can also help drive up occupancy at self-
storage businesses. Factors like sharp increases in new home- building or exponential job growth at a local corporation may drive new customers to both the area and the self-storage facility. Self-storage facilities operating in areas with a great deal of new migration will also benefit from growing demand and higher occupancy rates.
Indicator Of Demand Occupancy data can provide a window to demand for individ- ual unit sizes. For example, a store with an occupancy rate of 80 percent may want to run a special to attract new customers. However, after further examination of unit-by-unit or square footage occupancy rates, the operator might discover that there is only excess availability in large-sized units at the property, for example. This information can then be used to run promotions that only apply to the store’s largest spaces while keeping rates for smaller sizes intact. Additionally, facilities with the capacity to change unit sizes may consider dividing a large storage space into two or more smaller units to better meet their self-storage customers’ needs.
Since self-storage is a highly
localized industry, conditions in the immediate market area surrounding the store can have a major impact on occu- pancy rates. Factors such as a depressed local economy or the opening of a new storage facility in the area can poten- tially lead to a decline in occu- pancy. On the other end of the spectrum, new home develop- ments, an explosion in recruit- ment at local companies, and other dynamics are often met with sharp increases in occu- pancy rates.
In general, most indus- try experts agree that target
ccupancy rates are some of the most highly scrutinized numbers in the self-storage industry. The data is often the first place owners and operators look to gauge the suc-
At first glance, it may seem that the best way to improve the
bottom line is to focus on increasing occupancy and bringing more tenants to the store. However, the goal of the self-storage business is not simply to fill empty units—the end goal is to gen- erate profit. Despite the secure feeling a fully occupied facility can provide owners and staff members, the reality is that only a property with open space to rent can effectively increase dol- lars coming into the business and meet the storage needs of the community.
In other words, maximizing occupancy should always take
a back seat to maximizing income. However, optimizing a self- storage business’ bottom line is only possible when owners and operators use their knowledge of both occupancy and pricing to make tactical business decisions. Occupancy trends must be followed and examined on a per unit basis to help pinpoint the best possible rental rate strategy.
The Art Of Occupancy In order to deliver the most successful pricing plans, many factors are evaluated including street rates, discounts, inven- tory levels, historic trends, and move-in specials. Combining the data to determine optimal target occupancy for a specific self-storage store is somewhat of an art form. As always, busi- ness conditions in a facility’s immediate market area must be considered when creating occupancy strategies for indi- vidual storage stores.
Table 5.1 –
Historical National Occupancy
Year Occupancy 1987 78.4% 1988 80.4% 1989 85.9% 1990 81.5% 1991 86.4% 1992 85.0% 1993 88.3% 1994 89.9% 1995 88.5% 1996 88.3% 1997 85.1% 1998 82.9% 1999 86.9% 2000 83.7% 2001 86.1% 2002 85.4% 2003 84.6% 2004 84.2% 2005 83.0% 2006 83.0% 2007 81.4% 2008 80.3% 2009 76.7% 2010 75.7% 2011 79.7% 2012 85.0% 2013 87.8% 2014 89.1% 2015 90.2%
*Based on Second Quarter Survey Results
Source: Self-Storage Almanac (1987 - 2015) © 2015 REIS, INC.
2016 Self-Storage Almanac 59
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150 |
Page 151 |
Page 152
