Rental Rates • Section 8 W
hen it comes to revenue, a self-storage facility’s pri- mary source of income is from the monthly rental rates that are paid by its residential and commer-
cial tenants for occupying units of various sizes and types. Though some self-storage facilities offer specialty units, such as wine lockers, RV and boat spaces, safety deposit boxes, and the like, this section of the Almanac focuses on the indus- try’s two most common types: climate-controlled units and non-climate controlled units. Additionally, while unit sizes vary by facility, only data from the five most popular unit siz- es is presented. Those sizes include 5-by-5, 5-by-10, 10-by-10, 10-by-15, and 10-by-20. Depending upon a market’s de- mand, a facility may offer larger units, such as 10-by-30s, to accommodate commercial tenants, or in-between sizes, such as 7.5 feet as one dimension of the unit size, to meet the demand of college students and other resi- dential customers.
Regardless of the unit size, the goal of every self-storage operator should be to maximize rental rates based on supply and demand. Throughout the past several years, operators have achieved this by employing rate management software. These so- phisticated, industry-specific rate management software programs utilize proprietary algorithms and formulas, as well as comparisons of competitors’ rates, to suggest rental rate increase amounts by unit size, type, availability, and de- mand. The suggestions can then be applied to the current street rates and/or the rates of existing tenants; the rate management software even automatically up- dates the rates on the facility’s website and sends rate increase notifications to tenants. Some self-storage facilities implement rental rate adjustments on a daily basis, while others, including REITs and larger self-storage operators, may alter their street rates multi- ple times a day based on real-time demand.
Although rate management
software can enable self-storage operators to improve their net operating income, supply and seasonality ultimately determine
the asking rates. From 2016 to 2019, there was a staggering amount of new self-storage development across the coun- try. The surge in supply dampened demand in some of the major metropolitan statistical areas (MSAs) and secondary markets within the United States last year.
In 2020, the global COVID-19 pandemic brought about new challenges for rental rates at
self-storage facilities
throughout the U.S. For starters, many states declared the coronavirus a state of emergency, and landlords, including self-storage facilities, are not permitted to raise rents during a time of crisis due to price gouging laws. Along the same lines, evictions were prohibited in some states. From mid- March and into the summer months, lien sales were not an
2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2
Source: Radius+ 2021 Self-Storage Almanac 67
$50.09
$50.40 $51.03 $51.38 $51.34 $51.74 $52.27 $52.54 $52.10 $52.74 $54.22 $54.47 $54.00 $55.07 $56.87 $56.47 $56.23 $57.28 $59.00 $48.90 $45.20 $47.20 $48.00 $49.40 $45.80 $45.30 $47.30 $47.59 $45.78 $45.21 $47.23 $46.69 $44.31 $44.63 $44.81
$69.03 $69.60 $70.40 $71.05 $70.97 $71.43 $72.15 $72.78 $72.11 $73.19 $75.21 $75.61 $74.87 $76.49 $79.12 $78.64 $78.29 $79.75 $82.29 $69.30 $65.80 $64.60 $68.80 $71.00 $66.30 $65.00 $68.00 $68.90 $66.28 $65.25 $67.94 $66.99 $63.84 $63.60 $63.05
$109.00 $109.61 $110.82 $112.12 $112.15 $112.74 $113.83 $115.04 $114.10 $115.84 $119.06 $119.66 $118.41 $120.93 $125.24 $124.68 $123.54 $125.68 $129.23 $109.10 $103.00 $102.60 $106.10 $109.60 $102.90 $100.40 $105.60 $106.93 $105.27 $102.78 $107.11 $105.72 $100.30 $99.24 $97.40
$142.70 $143.35 $145.07 $146.31 $146.43 $146.93 $147.89 $149.02 $147.93 $150.30 $154.05 $154.78 $153.53 $156.81 $162.22 $160.98 $159.81 $162.94 $167.59 $137.00 $130.80 $129.30 $134.30 $141.40 $129.50 $127.40 $132.70 $135.84 $131.71 $128.77 $132.97 $131.59 $127.07 $126.59 $124.07
$171.31 $172.26 $174.22 $175.39 $176.19 $177.21 $179.74 $180.99 $179.76 $182.26 $186.85 $187.63 $186.27 $190.00 $196.39 $195.28 $193.95 $196.98 $202.85 $157.20 $157.60 $155.40 $161.30 $164.40 $152.30 $148.90 $155.60 $156.28 $152.53 $153.22 $156.41 $153.15 $149.29 $148.95 $146.14
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