Occupancy Rates • Section 9 T


he ideal target for many self-storage operators is 90 to 95 percent physical occupancy. Unfortunately, sometimes there is a misconception in the industry that 100 percent occupancy is the goal. If you have no units to rent, you are losing money. Furthermore,


you are unable to meet the needs of those in the community who need storage. Instead of turning customers away and losing that potential income, rates need to be increased on existing customers or you need to be adding more units into the rental pool by expand- ing—which is not always feasible.


As discussed in Section 8, like rental rate data, the 2014 Almanac marked the first year for


which occupancy rates were provided by REIS; data was specific to the top 50 U.S. metro areas and 279 submarkets. In addition, data for the states not covered by REIS were previous- ly provided by Stortrack. This year, all occupancy rate data is provided by Union Realtime, the official data provider for the Self-Storage Almanac.


Instead of turning customers away and losing that


potential income, rates need to be increased on existing customers or you need to be adding more units into the rental pool by expanding—which is not always feasible.


National Occupancy Rates With a lack of supply still existing in many areas, self-storage operators for the most part have continued to see strong occupancy. As seen in Table 9.1, national occupancy held steady over the past year and actually saw a slight uptick, increasing from 91.2 percent in the second quarter of 2016 to 92.8 percent by Q2 2017.


Looking at national occupancy by quarter in Table 9.2 and Chart 9.1 on the following


page, we can see that the first and fourth quarters of the year tend to see a slight dip in oc- cupancy. This is typically attributed to the fact that summer months tend to be the busiest time for self-storage facilities.


After hitting an occupancy level of 91.2 during the second quarter of 2016, on average,


facilities across the country saw an uptick to 92.2 percent in the third quarter. The fourth quarter of 2016 and first quarter of 2017 saw the typical winter dip to 90.7 percent and 90.3


Physical vs. Economic Occupancy


Occupancy in the self-storage industry is typically measured in two ways: physical and economic. Physical occupancy is calculated by dividing the number of rented units or square footage of those units by the total


number of spaces available. Example: If a 100-unit facility has 90 rented units, the occupancy would be 90 percent. Economic occupancy tallies the total number of rented units while allowing for any concessions offered, fees collected,


and rents realized for every storage unit at the facility. Example: If the 100-unit facility has 90 units rented and 10 of those units were offered with a one-month free conces-


sion, then the site’s occupancy rate would need to account for this. While the physical occupancy would be 90 percent, the economic occupancy would be 80 percent since 10 of those units were “free” due to the concession offered for the first month.


2018 Self-Storage Almanac 103


 


 1987


1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001


 78.4%


80.4% 85.9% 81.5% 86.4% 85.0% 88.3% 89.9% 88.5% 88.3% 85.1% 82.9% 86.9% 83.7% 86.1%


2002 85.4% 2003 84.6% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017


*Based on 2nd Quarter Numbers Sources: Self-Storage Almanac (1987–2017), Union Realtime


84.2% 83.0% 83.0% 81.4% 80.3% 76.7% 75.7% 79.7% 85.0% 87.8% 89.1% 90.2% 91.2% 92.8%


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