Section 8 • Rental Rates On another note, Tables 8.3 and 8.4 show that smaller unit
sizes generate more revenue per square foot. As a matter of fact, despite COVID-19, 25-square-foot units (5-by-5s) contin- ued to yield more than double the amount than the largest reported size (200 square foot or 10-by-20). While it may be tempting to alter your unit mix to create more 5-by-5s in an effort to generate more income, it’s best to stick to a unit mix that has been designed to meet the needs of your specific market area.
Regional Rental Rates Although the pandemic and its resulting shutdowns brought new construction to a temporary halt in the first half of 2020, the previous surge of new supply throughout the United States impacted the national averages for rental rates of every unit size and type over the past four years. But self- storage demand is market specific, varying by city, state, and region. Therefore, in this section we will evaluate the health of rental rates by region.
Midwest (East North Central) (Tables on page 74) The Midwest (East North Central) region is comprised of five states near the Great Lakes: Illinois, Indiana, Michigan, Ohio, and Wisconsin. Its major MSAs include Akron, Ohio; Chicago, Ill.; Cincinnati, Ohio; Cleveland, Ohio; Columbus, Ohio; Day- ton, Ohio; Detroit, Mich.; Grand Rapids, Mich.; Indianapolis,
Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18
Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19
Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20
Jun-20 Source: Radius+ 70 Self-Storage Almanac 2021
$1.97 $1.99 $2.03 $2.19 $2.24 $2.24 $2.02 $2.01 $1.91 $1.85 $1.83 $1.81 $1.81 $1.80 $1.82 $1.86 $1.90 $1.90 $1.91 $1.89 $1.80 $1.77 $1.77 $1.78 $1.78 $1.78 $1.80 $1.77 $1.78
$1.83
$1.41 $1.43 $1.44 $1.57 $1.60 $1.62 $1.43 $1.44 $1.38 $1.34 $1.33 $1.31 $1.30 $1.31 $1.31 $1.34 $1.37 $1.38 $1.37 $1.35 $1.30 $1.28 $1.28 $1.27 $1.28 $1.26 $1.28 $1.24 $1.25
$1.29
$1.14 $1.15 $1.16 $1.25 $1.26 $1.28 $1.11 $1.11 $1.07 $1.04 $1.03 $1.01 $1.02 $1.03 $1.04 $1.06 $1.07 $1.08 $1.08 $1.06 $1.03 $1.01 $1.00 $1.00 $1.00 $0.99 $1.00 $0.96 $0.97
$1.00
Ind.; Madison, Wis.; Milwaukee, Wis.; and Toledo, Ohio. The region’s largest city is Chicago.
Many of the lowest rental rates reported in Table 8.5 oc-
curred in 2020. It appeared as though the annual seasonal uptick would occur as usual in the second quarter as all unit sizes and types posted modest gains from February to March 2020. However, the pandemic had other plans. From March to April 2020, rental rates for every unit size and type expe- rienced an abnormal decline. The most substantial decrease in that one-month period was reported for non-climate- controlled 10-by-15s, which shrank by $4.37 to $103.58. For that same timeframe, the only two unit sizes to post rental rate drops less than $1 were non-climate-controlled 5-by-5s ($0.50) and climate-controlled 5-by-5s ($0.99). After those declines, all but two unit sizes experienced slight decreas- es again in May 2020. Non-climate-controlled 5-by-5s and 5-by-10s saw minimal increases of $1.01 and $0.87, respec- tively, that month. Thankfully, by June 2020, rental rates for all unit sizes and types were on the mend, but only two of those matched or exceeded their March 2020 rates. Once again, non-climate-controlled 5-by-5s and 5-by-10s went against the norm, reporting higher rates for June 2020 than March 2020.
$0.98 $1.00 $1.00 $1.07 $1.07 $1.09 $0.93 $0.97 $0.93 $0.87 $0.87 $0.85 $0.85 $0.86 $0.86 $0.87 $0.89 $0.89 $0.89 $0.88 $0.86 $0.86 $0.85 $0.84 $0.84 $0.85 $0.85 $0.82 $0.82
$0.84
$0.90
$0.91 $0.91 $0.97 $0.98 $0.99 $0.85 $0.82 $0.79 $0.77 $0.76 $0.75 $0.76 $0.77 $0.77 $0.78 $0.78 $0.78 $0.78 $0.77 $0.75 $0.75 $0.74 $0.74 $0.74 $0.74 $0.75 $0.73 $0.72
$0.74
On a quarterly basis, Tables 8.6 and 8.7 show that all unit sizes and types in the Midwest (East North Central) region had their topmost rates per square foot in the second quarter of 2017. Con- versely, the lowest rates per square foot for every unit size and type occurred in 2020; non-climate- controlled 5-by-5s experienced the lowest rate per square foot in the first quarter, while all other unit sizes and types had their bottom- most rates in the second quarter.
Midwest (West North Central) (Tables on page 75) The core of the “Farm Belt,” the Midwest (West North Central), is made up of seven states: Iowa, Kan- sas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota. This region’s top MSAs include Des Moines, Iowa; Kansas
City, Mo.;
Minneapolis-St.Paul, Minn.; Oma- ha, Neb.; St. Louis, Mo.; Twin Cities, Minn.; and Wichita, Kan. Its largest MSA is
Minneapolis-St.Paul.
As seen in Table 8.8, all the low- est rental rates in the West North
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