In the initial months of 2023 through the close of the third quarter, there has been a noteworthy nationwide drop in self-storage rates. Drawing upon comprehensive data from StorTrack, an analysis of monthly average rates for 10×10 non-climate-controlled units shows a downward trend—a marked difference from the trends observed in 2022 and post-pandemic era. The first quarter of 2023 showed rates trending 2% to 3% lower. However, the rate data for the third quarter reveals a substantial decline of over 8%.
Housing and Workplace Trends
One contributing factor to this decline is the stagnant housing market. Existing home sales have declined, and rental rates are at an all-time high. Consequently, individuals are opting to stay in their current residences for longer periods and simply not looking to relocate. For self-storage operators, this translates to fewer new renters and subsequently, lower occupancy rates.
Furthermore, as many American workers return to in-person work, the need for additional office space and extra storage room has decreased. This shift in work dynamics further impacts the demand for self-storage units.
Strategic Responses to Rate Declines
The decline in rates calls for self-storage operators to get strategic about their pricing. While there will be initial revenue challenges, operators have an opportunity to optimize their operations. One way to navigate this is by leveraging self-storage market data to make informed, data-driven decisions and ensure they remain competitive.
Market data can be harnessed to identify which unit sizes and types are in higher demand, helping operators optimize their pricing accordingly. Market data can also indicate if there’s a demand for additional amenities, such as climate-controlled units and units with other features. Lastly, market data can be used to set competitive, yet sustainable rates. Operators can consider implementing dynamic pricing strategies that adjust rates based on real-time demand and availability.
Self-storage developers and investors can use market data to identify areas with more stable or growing demand compared to areas experiencing declines. Data can also help in evaluating existing self-storage facilities in the target market and understand rental rates and amenities offered. Having this data available is essential in assessing the level of competition in the market before making an investment decision.
In 2023, a substantial nationwide drop in self-storage rates signifies a shift from prior trends. With housing market stagnation and altered work dynamics, operators face challenges. Yet, strategic use of market data empowers adaptation. Understanding demand for unit types, amenities, and implementing dynamic pricing strategies enables resilience in a changing landscape. For developers and investors, market insights serve as a guide amid fluctuating demand. In this evolving industry, data emerges as a critical tool for success.
StorTrack provides tailored platforms for self-storage professionals—managers, owners, operators, and investors—for in-depth market and competitor analysis. The company’s data-driven solutions empower evaluations of primary, secondary and tertiary markets in the U.S., Canada and the UK. Elevate your self-storage strategy with StorTrack. Learn more at www.StorTrack.com