A 3.3% street rate cut, the pace REITs set, only pays for itself if it brings in 3.41% more move-ins. On a facility renting 20 10x10s a month, that's 0.68 of a unit, and the cut has to be the reason it shows up.
Before you match anyone, price what the cut has to buy.
What happened
Yardi Matrix's October report has advertised rates down 1.8% in September from a year earlier. Every one of the 30 metros it tracks was lower than the month before, according to Modern Storage Media's summary.
The cuts weren't even. REITs took 3.3% off their advertised rates over the year, and non-REIT operators took 1.0%, the same report shows. We put those two cuts in dollars in our earlier post on the report.
Less building hasn't helped yet. About 43.8 million NRSF was under construction at the end of September, which is 2.1% of existing inventory and 40 basis points lower than a year ago, per Yardi. New stores are leasing up slowly and demand is soft, so the thinner pipeline isn't lifting street rates.
Who is still building matters here. Tarik Williams of TLW Construction says most of his clients now are public companies or large institutional and private equity groups, with only a handful of small operators getting financing done, in Modern Storage Media's interview. The store down the road that's cutting rates probably has a balance sheet that can wait.
What it means for your facility
The cut looks small on a rate card. The question is how many more units you have to rent to make the same money.
Our assumptions, not Yardi's: your facility rents 20 10x10s a month at a $120 street rate. That's $2,400 of new monthly rent. After a cut, you need to rent enough units at the lower rate to land on $2,400 again.
- A 1.0% cut, the non-REIT pace, lowers the rate to $118.80. You need 20.20 units a month.
- A 1.8% cut, the national pace, lowers it to $117.84. You need 20.37 units.
- A 3.3% cut, the REIT pace, lowers it to $116.04. You need 20.68 units.
So the lift you need is 1.01%, 1.83% and 3.41% more move-ins. At the REIT pace on this facility, that's 0.68 of a unit a month, or one extra move-in about every 1.47 months.
That's why cuts feel safe. The hurdle is low. Here's why it's harder to clear than it looks.
- Your neighbors are cutting too. When all 30 metros are down, a cut that only matches the market doesn't win share. It just lowers your rent.
- Demand is the limit. Yardi describes soft demand. If your phones and Map Pack listing aren't producing more shoppers, a lower rate has nobody extra to convert.
- The lower rate sticks. Every tenant you sign at the new rate starts from a lower base, and any later ECRI builds on it.
Our read: cut a unit class only when you can name where the extra move-ins come from. If you can't, hold the rate and fix the lead flow first. The exception is a facility in lease-up, where filling units sooner can be worth a lower rate. Williams' point about who's building also says something about timing. Developer Noah Mehrkam doesn't expect broad recovery before 2028, he told Modern Storage Media, and that's a forecast, not a number. Plan for a long stretch of flat street rates, not a quick bounce.
What to check this week
- Pull your move-ins for the last 90 days by unit class and divide by three. That's your monthly count.
- For each class, multiply the count by your street rate. Divide that by the rate after the cut you're considering. The extra units are what the cut has to win.
- Compare that to your leads. Pull web reservations and calls for the same 90 days and your conversion rate. If shoppers already convert well, rate isn't what's holding you back.
- Check what your three closest competitors advertise for the same classes, and whether it moved this month. If they all dropped, matching them only lowers your rent.
- If you do cut, cut one class for 30 days. Compare move-ins to the break-even count before you touch the rest.
If you want rates, calls and move-ins read together every month, that's what our self-storage marketing service is for.