Are Portable Units Real Estate or Personal Property?

By Kate Spencer

In recent years, the use of portable units and containers to expand the footprint of self-storage facilities and boost revenue has surged. This trend is largely driven by supply chain disruptions, prolonged entitlement processes and fluctuating construction costs. 

These units can be added to a property in various ways, and as appraisers, we pay close attention to how they’re placed or installed. The simplest method involves placing the units directly on the ground—on surfaces ranging from grass and gravel to asphalt and concrete. 

In such cases, there is typically no anchoring system in place. Some units are secured to the ground and connected to each other using a metal façade, which increases their appeal. Others are more permanently installed—anchored to the ground, connected to each other, with electrical service installed. 

Real Estate vs. Personal Property: What’s the Difference?
Owners, buyers, sellers, lenders and tax assessors frequently debate whether these units should be classified as real estate (and included in the net rentable square footage) or as personal property. Understanding the distinction is crucial when valuing a property. 

Appraisers rely on the following definitions: 

• Real Property: Anything growing on, affixed to, or built upon land. It is generally immovable and permanently attached to the land.
• Personal Property: Any movable item of value that can be owned by an individual and is not considered real property. From a tax perspective, owners often prefer to install these units discreetly—ideally without triggering reassessment. Conversely, when seeking financing, they typically want the units to be treated as real estate and included in the net rentable area (NRA). A classic case of wanting to have their cake and eat it too. 

Key Criteria for Classification
To be considered real estate, portable units generally must meet one or more of the following criteria:

• Assessor Recognition: Are the units valued as real estate by the county assessor? Have they gone through the permitting process?
• Permanent Installation: Are the units permanently affixed to the ground or to each other?
• Functional Permanence: Does their size and placement suggest they function as permanent structures?

 If these criteria are not met, the units should not be included in the NRA. Instead, it may be necessary to separate out the value attributable to FF&E (Furniture, Fixtures and Equipment). 

Appraisal and Income Considerations
We routinely advise clients on how to approach portable units during the appraisal process—ideally at the outset of an assignment, not at the end! In practice, lenders often allow a portion of income to be categorized as “Miscellaneous” or “Other Income,” typically around 10%, without requiring separate consideration for Business Value or FF&E. If income from portable units falls below this threshold, separate valuation may not be necessary. However, if it exceeds the threshold, underwriters commonly request an estimate of the value attributable to FF&E.

Kate Spencer, MAI, is a self-storage practice leader focusing on valuation and advisory services at Colliers. Colliers is a global diversified professional services and investment management company. Operating through three industry-leading platforms – Real Estate Services, Engineering and Investment Management – the company has a proven business model, an enterprising culture and a unique partnership philosophy that drives growth and value creation. Fueled by visionary leadership, Colliers has consistently delivered approximately 20% compound annual investment returns for shareholders for 30 years. To learn more, click here. 

Toy Storage Nation