While self-storage prices continue to languish, occupancy rates are climbing faster than they did this time last year.
Aggregated industry occupancy climbed 1.23% since March. That’s an improvement over last year’s weak busy season when occupancy only grew 79 basis points during the five-month period between April and August.
June saw the biggest month over month change in occupancy, climbing 84 basis points over the previous month. In 2023, June was also the peak for occupancy growth with a lift of just 52 basis points from the previous month.
Still, occupancy levels are down on a year over year basis—the occupancy rate of 85.29% in July marks a decline of 2.67% compared to the same period in 2023. But year-over-year changes in occupancy have consistently improved since March, suggesting a change in trajectory towards higher occupancies for self-storage operators moving forward.
Managing for occupancy
The stronger occupancy growth may come as a surprise to some, considering there hasn’t been major changes in terms of interest rates or the housing market opening up. As of June existing home sales remained down about 5.4%. Search volume for storage related keywords also remains down compared to last year.
Looking at move-in and move-out data, we can see that the recent lift in occupancy isn’t due to growing demand—in fact move-ins for the first seven months of 2024 are down more than 6.8% compared to the same period last year. What has happened is move out activity has decreased, dropping more than 7.6% compared to last year. So while there are less tenants moving into a storage unit, more existing tenants are sticking around for longer. One explanation for this customer behavior is that it is another product of continued housing market stagnation.
The ratio of move-ins to move-outs so far in 2024 is 1.17 compared to 1.15 at this point in 2023. The trend suggests that many in the storage industry are becoming more adept at strategically managing their facilities to retain or boost occupancy, despite an environment of weak demand and declining prices.
Pricing limps along
Lacking a strong surge in seasonal demand, operators continue to struggle to increase rental rates. Rates have only grown 0.21% since the beginning of the year, compared to 1.27% from January to July last year.
The average reserved rate for all units was $85.30 in July, marking a 17.8% decline from the previous year. The average price declined 3.36% from the previous month, following month to month gains of 1.52% in May and 3.23% in June. Prices peaked in July with an average rental rate of $88.17 per month.
Rolling with the flow
With pricing tighter and new demand slowly, storage operators must seek to grow their business strategically and creatively, while retaining existing customers. The right mix of lead generation, expense cutting, and revenue management tactics are key to growing net income amid the current business cycle. To see how Storable can help empower you to run a more efficient and profitable storage operation, request a demo today.
