Self Storage Units Stabilized at 80% in under supplied market

[Ronak Shah]

I am underwriting a self storage property which apparently stays around 80% physically occupied year around and seems charges market rates. Based on population in 3 and 5 mile radius, it seems market has only about 2.5 square foot per person. With so much supposedly under supplied market, why would the property stay at this occupancy level? Does this say anything about the market?

[Zach Quick]

@Ronak Shah think of everything impacting occupancy at the property first.

-good location/traffic?

-good signage?

-good management? Do they answer the phone?

-Is the property well kept?

Now go shop as a customer the nearest 3 competitors and see how their rates differ/compare, ask questions like a tenant to see what you think occupancy is there. If that doesn’t get you anywhere, rent a small unit at each and go count locks at those facilities.

You will learn a lot, but I would get a really good pulse on the property itself first and that will help you guide your thoughts in comparison on competitors.