The physical condition of a self-storage property significantly impacts both rental rates and occupancy by directly influencing customer perception of security, value, and quality. Facilities that are clean, well-lit, well-maintained, and modern can command higher rents and attract more tenants, while neglected properties must often lower prices to compete. In today’s hyper-competitive world, it is mission-critical to maintain or improve a facility’s physical condition.
Impact on rental rates
Higher rent prices: A well-maintained property with strong curb appeal can justify charging premium rental rates. Visible care of the facility signals to customers that their belongings will be safe and secure, a service many are willing to pay extra for. Factors that enable higher rents include:
- Aesthetics: Fresh paint, clean grounds, well-maintained and operational doors, and attractive landscaping improve a facility’s “curb appeal,” creating a positive first impression that draws in potential renters
- Security: Investing in enhanced security features like secure and operational gates, bright lighting, and smart access controls increases customer confidence and adds perceived value
- Cleanliness: Paved, well-maintained driveways and pest-free units assure tenants that their stored items will be protected
On the other hand, lower rent prices: A facility in poor physical condition must often offer lower rates or special concessions to attract and retain tenants. This is because a neglected appearance creates a negative perception of security and overall care.
Impact on occupancy
Higher occupancy: A clean, safe, and modern facility attracts and retains more customers, leading to higher physical occupancy rates
- Initial attraction: An appealing exterior and well-maintained property make potential tenants feel more comfortable choosing a facility for their valuable belongings
- Tenant retention: High-quality facilities foster customer satisfaction and a sense of trust, which encourages long-term rentals and reduces turnover
- Targeting the right customers: Investing in facility upgrades helps attract serious, long-term tenants rather than those who are more likely to abandon their units. Long-term tenants are self-storage facility’s most valuable asset! Attracting and retaining long-term customers has a huge impact on value
Lower occupancy (or “economic vacancy”): A facility in disrepair can have a high “economic vacancy,” even if its physical occupancy rate appears normal. This occurs because low-quality properties may need to offer deep discounts and concessions to fill units.
- Deterring customers: A run-down facility with issues like potholes, peeling paint, or inadequate lighting can deter prospective tenants who perceive it as unsafe or poorly managed
- Higher turnover: If tenants feel the facility is not well-cared for, they are more likely to move their belongings out once they find a better option
- Increased risks: Facilities in poor condition are more susceptible to theft and vandalism, which further damages their reputation and discourages potential customers
As a self-storage real estate broker, it’s easy to pinpoint the accretive value that seemingly minor improvements or upgrades can have on a facility’s value – every additional $1 in monthly income translates to over $200 in value. Take a hard look at your facility and decide what improvements make the most “cents” for you!
About the Author:
Tom de Jong is Executive Vice President with Colliers International and a founding member of the De Jong Self Storage Team I COLLIERS, with over 18 years of experience and billions in sales of self storage properties.
Source: Tom de Jong, De Jong Self Storage Team I COLLIERS
