Yardi Matrix's October report has every one of its 30 metros cutting advertised rates, and REITs cutting faster than independents (Modern Storage Media). If a REIT store sits in your trade area, matching its cut costs more than the rate gap is worth.
What happened
Nationally, what operators advertise for a unit was 1.8% lower in September than a year earlier, Modern Storage Media reports from Yardi Matrix's October release. Month over month, none of the 30 metros Yardi follows went up.
REITs cut deeper than everyone else. Over the same year they took 3.3% off what they advertise, while non-REIT operators took 1.0%, per the same report.
Building is slowing, and rates haven't felt it yet. Roughly 43.8 million NRSF was still under construction when September ended, Yardi reports. That's 2.1% of existing stock, 40 basis points less than a year before. New stores are taking longer to lease up and demand is soft, so a shrinking pipeline isn't lifting rates.
Don't expect a quick turn. Mark Degner, CEO of Safeguard Self Storage, told Modern Storage Media this week that recovery will take years. His reasoning:
"Lower interest rates will help, but occupancy must improve before rents can meaningfully increase to really boost profitability." (Mark Degner, Safeguard Self Storage, Modern Storage Media)
He also says development added roughly 3.5% to 4% to supply every year for nearly a decade, in the same interview. Another developer in the piece doesn't expect broad recovery before 2028. That's one developer's view, not a forecast anyone can lean on.
What it means for your facility
Percentages hide the dollars, so here they are. These are our assumptions, not Yardi's. Take a facility with 10,000 NRSF of vacant units advertised at $1.20 a foot a month, which is $12,000 a month if every foot rented at street. A 10x10 at that rate asks $120.
- A 1.8% cut takes $216 a month off that asking rent.
- A 3.3% cut, the REIT pace, takes $396.
- A 1.0% cut, the non-REIT pace, takes $120.
If you and a REIT store both started the year at $1.20 and each moved at the national pace for your group, the gap today is $276 a month in asking rent across the vacant space. On one 10x10 it's $2.76 a month.
That's the number to weigh before you chase. Matching the REIT's cut means giving up $2.76 on every 10x10 you rent from now on, for as long as the tenant stays. Whether a few dollars of rate wins you the move-in is something your own data can answer, and step 4 below shows how.
Our read: unless you can show that the gap is costing you move-ins, hold your rate. The exception is a facility in lease-up, where filling units first can justify a sharper rate. Degner's point about occupancy cuts the same way. Rents won't rise meaningfully until occupancy does, so what matters is how you fill units, not only how low you go. Our piece on physical versus economic occupancy shows why a full building at weak rates can still underperform.
What to check this week
- Pull each unit class's advertised rate from a year ago and today. Compare your change with 1.8%, and with 1.0% and 3.3% if you compete with both kinds of operator.
- List the REIT and independent stores within your trade area. Record their advertised 10x10 and 10x20 rates in dollars, not percent.
- Price any match before you make it. Vacant NRSF, times your rate, times the size of the cut, gives the monthly asking rent you give up.
- Compare move-ins and vacates for the last three months, by unit class. If move-ins are holding at today's rates, a competitor's cut isn't costing you anything yet.
- Search your top three terms and note where your GBP lands in the Map Pack. If you're missing from it, that's a cheaper fix than a rate cut.
Any increase on tenants already in place needs its own look. Our ECRI explainer covers the math, and the 60-day notice post covers the notice side.
If you'd rather have someone watch your rates against the market and your search visibility together, that's what our self-storage marketing service does.