In the self storage sector, it’s tempting to use advertised asking rates, also known as street rates, as a quick benchmark against your facility or to adopt in your revenue projections or feasibility analysis. However, it’s important to be aware that asking rates will generally vary from achieved rates by as much as 40%, and as such, they shouldn’t be used in isolation. Leaning too heavily on advertised rates can paint a skewed picture of what’s really being achieved in the market, and what can be achieved moving forward.
Asking Rates Aren’t What’s Actually Being Paid
Just because a unit is listed at a certain rate doesn’t mean it’s being rented at that price. The reality is that 1) customers negotiate; 2) most customers move-in on different rates; and 3) discounts and incentives (also referred to as concessions), such as “first month free” or “50% off for three months”, are often used to attract new customers. While these offers are effective at driving occupancy, they reduce the actual revenue being received.
When only the advertised, or headline (“face”) rates are considered, the income potential of a facility can appear significantly inflated, which can distort revenue projections, result in inaccurate valuations, and misinform investment decisions. This is particularly risky when forecasting the performance of a proposed facility. We regularly witness new entrants and developers make the critical error of adopting an inflated achievable fee rate.
Dynamic and Automated Pricing Tools Shift Rates Constantly
Many prominent self storage operators have adopted dynamic pricing models. These systems adjust asking rates in real time based on supply, demand, competitor pricing, and unit-size occupancy trends. Tools like Prorize, an automated pricing tool from the USA now gaining traction in Australia and New Zealand, take this a step further by continuously fine-tuning rates automatically with minimal human input.
What this means is that pricing (asking rates) is no longer a direct reflection of performance (achieved rates). Prior to the introduction of automated dynamic pricing tools, the variance between asking rates and achieved rates was typically around 5%-10%. In recent years, we have observed the variance more commonly sitting between 10%-25%. And in some instances, we have witnessed variances as high as 40%. This increased variance has no distinct pattern or consistency, making asking rates unreliable as a stable benchmark for achievable fee rates.
Demand Fluctuates — and So Should Price Expectations
Self storage demand is not constant. It fluctuates with macro-economic, micro-economic, and lifestyle changes. Pricing moves with demand and can be subject to seasonal shifts. Some operators lift rates in high-demand periods and soften them during quieter months; other’s take a longer-term approach with their rates. There is no set way to determine, or even estimate, how much a facility or operator’s advertised rates vary from its achieved rates.
What Matters: Achieved Revenue, Not Theoretical Rates
For accurate revenue projections, valuations, investment decisions, and operational planning, you need to be certain that your inputs reflect what is actually occurring in the market. This includes being honest with yourself and accepting the advice of those who know the market. If professional advice suggests that the achievable average fee rate sits in the mid-$300/m² range, however $400/m² is being adopted in revenue projections, all stakeholders, including you, are at risk.
Achievable effective rates, which reflect what will actually be collected as revenue after all discounts and write-offs, matter far more than advertised ones.
Experienced valuers, competent operators, and knowledgeable advisors have market depth and resources to understand what is happening in the market. There is publicly available research, such as the Self Storage Performance Indicator Series, which relies upon actual revenue results to determine the effective fee rate trend in major markets. It’s the insights from these resources that deliver a true read on a facility’s revenue potential.
In short: asking rates are a starting point but should be considered with caution. If you’re forecasting revenue, look deeper than the headline figures, because real value is determined by what’s achievable, not just what’s asked.
