Section 15 • Self-Storage Valuation


For example, as a guide, a trade area that has occupancy in the 90 percent or more range might reasonably be consid- ered under-supplied. Benchmarks, such as the total square footage of self-storage per person, can be compared in a particular trade area to data published in the Self-Storage Almanac or other resources. For example, the 2020 Self- Storage Almanac indicates a national average of 5.71 square feet per person, but the CBSA data indicates a range by CBSA (Core Based Statistical Area) from 2.82 square feet per per- son (New York-Newark-Jersey City, NY-NJ-PA CBSA to 12.64 square feet per person in Boise City, Idaho CBSA). So, if oc- cupancy is 90 percent, and the square foot per person is below the CBSA average and national average, a reasonable, qualitative conclusion may be under-supply. Quantitative models based on demographics and comparable data may rely on hedonic regression models or simple algorithms to determine stabilized demand in a trade area and compare forecast demand to existing supply. An example is shown in Tables 15.1 and 15.2 on page 133.


In these examples, the trade area shows physical occu-


pancy of 92 percent and existing supply of 5.39 square feet per person, suggesting under-supply. An econometric mod- el quantifies and corroborates the qualitative model and reflects stabilized demand above the CBSA average of 4.68 square feet per person. This variance highlights the impor- tance of trade area analysis.


As to historical trends, a review of the subject property


financials is best. An example is presented in Table 15.3 below.


Notice the pattern of Effective Gross Income or EGI. From


2017 to 2018, it increased $63,537, an increase of 18.3 percent. From 2018 to 2019, EGI increased $2,582 or 0.62 percent. The trailing 12 months (TTM) is not as good an indicator, as cal- endar years, due to seasonality, can be skewed. Given this history, an increase of $19,469 or 4.67 percent is concluded in the Year 1 Forecast.


  


 Actual Rent (Occupied) Plus Market Rent (Vacant)


 


 





 


$319,453 $10.35


 


 


$383,948 $12.44


Other Rental Income Ancillary Income


 


Real Estate Taxes Property Insurance Utilities


Repairs & Maintenance Administration


$0 $0 $0


$30,473 0.99 $0 $0 $0


 


 $384,564 $12.46


$32,439 1.05 $0 $0 $0





 


$397,660 $12.89 $1,740


$0.06


         Billboard & Cell Tower Income $31,431 1.02 Parking Income


35,004 20,052 0


19,970 ($37,954) 


1.13 0.65


0.65


         Economic Vacancy


($1.23)


        





$42,708 $1.38 $3,676


0.12


$13,529 0.44 $8,356 $9,332


Off-Site Management (% of EGI) $0 On-Site Management Advertising


Miscellaneous Ground Lease


 Expense Ratio


 Source: Compiled by NKF


134 Self-Storage Almanac 2021 0.03


0.27 0.30


$67,788 2.20 $801 $0 $0


  41.66%


   


$51,468 $1.67 $4,026


0.13


$13,213 0.43 $4,439


0.14


$14,582 0.47 $0


$89,780 2.91 $0 $0 $0


  42.83%


   


$55,355 $1.79 $4,091


0.13


$13,746 0.45 $4,711


0.15


$18,447 0.60 $0


$73,716 2.39 $0 $0 $0


  40.78%


 


$48,939 $1.59 4,200


14,000 9,000


14,500 21,824 70,000 5,000 250 0


0.14 0.45 0.29 0.47 0.71 2.27 0.16 0.01


  43.01%


 


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