Selling a self storage facility
Self storage is valued on economic occupancy rather than physical occupancy. A facility that is ninety percent full at rates set years ago and never raised has a value gap a buyer can close, and both sides should be looking at the same in-place versus street rate comparison.
Written and reviewed by Antoine Campbell. Last reviewed .
Physical occupancy is not the number
Owner-operated facilities frequently show high physical occupancy and low economic occupancy: full of long-tenured tenants paying old rates, with concessions and delinquencies that never appear in a summary.
| Metric | What it tells a buyer |
|---|---|
| Physical occupancy | How many units are occupied |
| Economic occupancy | Revenue actually collected against gross potential rent |
| In-place versus street rate | How much rate increase the existing base can absorb |
| Delinquency and auction rate | Collection discipline and tenant quality |
| Length of stay | How durable the revenue base is |
Where additional value comes from
- Existing rate management practice, or the absence of one
- Tenant insurance or protection plan participation
- Late fee policy and enforcement
- Ancillary income: boxes, locks, truck rental, parking
- Expansion land, unbuilt phases, or unit mix reconfiguration
Site and operations
- Unit mix versus local demand, especially climate controlled share
- Gate, access control, security systems and cameras
- Roof, doors, paving and drainage condition
- Management software and the quality of the tenant records
- Staffing model and whether remote management is feasible
Diligence items specific to storage
- Rent roll with unit, tenant, in-place rate, move-in date and balance
- Twelve to twenty-four months of occupancy and rate history
- Delinquency aging and auction history
- Competitive supply within the trade area, including announced development
- Property survey, zoning and any expansion entitlement
- Lien sale procedure compliance under state self-storage statutes
What Maurant needs to evaluate this
- Three years of operating statements and tax returns
- Current rent roll and occupancy history
- Street rates versus in-place rates by unit type
- Delinquency report
- Property information, survey and zoning
When Maurant is not the right buyer
- Facilities in trade areas with heavy announced new supply and no rate cushion
- Sites with unresolved drainage or structural problems priced as stabilized
- Owners pricing on projected post-increase revenue rather than in-place performance
Questions owners ask
- Why do you ask for the rent roll so early?
- Because economic occupancy and the in-place rate gap cannot be seen in a profit and loss statement.
- Does expansion land add value?
- It can, if entitlement and demand support it. Unentitled land is valued as land.
- Should I raise rates before selling?
- A disciplined increase demonstrates the base can absorb it. A sudden increase before a sale invites scrutiny of churn.
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