Storage Monitor: Rates Drop Again, Occupancy Turns a Corner
Steep discounting in the self-storage industry continued in April, as many operators contended with weakened demand and excess capacity. But the race to the bottom for pricing might be over, as occupancy ticks up slightly and the moving season begins.
While operators are now poised to start pushing prices higher, they will remain constrained by frosty demand as interest rates are expected to remain elevated for the near-term—keeping would-be storage tenants inside their current homes.
At a Glance:
- The average self-storage unit rented for $83.25 per month in April 2024.
- The average self-storage rental rate is down 13.8% from the same month a year ago.
- Average stabilized occupancy was 84% in April 2024
- Self-storage average occupancy was down 1.9% from the same month a year ago
- Self-storage average occupancy was up 15 basis points in April compared to the previous month.
Self-Storage Prices
The average rent for all unit types was $83.25 a month in April, more than 14% lower than the same month a year ago, according to Storable data.
The downward trend in storage prices has become a familiar story as the industry contends with the backside of the pandemic-generated surge in demand that pushed storage rents to historic highs. The subsequent bust has been exacerbated by the rapid expansion of self-storage square footage built to capitalize on the upswing, as well as the continued deep freeze in the residential housing market.
Prices have likely hit a trough as the moving season kicks off in earnest. With higher rate paying tenants of the last few years are moving out they are being replaced with lower paying tenants. The coming months offer operators an opportunity to regain ground on the pricing front.
Self-Storage Occupancy
One positive sign that the promotional pricing is having its intended effects is a minor uptick in stabilized occupancy going from March 2024 to April.
According to Storable data, the industry occupancy rate was at about 84% in April, up 15 basis points from March. The change brings to an end a nine-month streak of declining occupancy rates.
Occupancy remains down compared to the previous year, with the industry reporting 1.9% less occupancy than it did the same month last year. On another positive note, that marks a smaller delta than the 3.5% difference in year-over-year occupancy recorded in March. With operators closing the gap on occupancy rates, the trend is a sign that some may have a stronger ability to advance street rates this summer.
