Unit Mix- The Most Critical Decision You Can Make in a Self Storage Development

Optimizing Your Self-Storage Unit Mix for Maximum Dollar Per Square Foot

One of the most critical decisions when developing a self-storage facility is how to optimize your unit mix to achieve the best dollar per square foot while ensuring rapid lease-up and long-term occupancy. Striking the right balance between unit sizes, design efficiency, and economic occupancy can make the difference between a thriving facility and one that struggles with low revenue and high delinquency.

Optimizing Unit Mix for Maximum Revenue

The ideal unit mix is a combination of data-driven decision-making and strategic planning before construction. To maximize revenue:

• Prioritize Smaller Units: Smaller units generate the highest revenue per square foot. A 5x5 or 5x10 unit can yield more income per square foot than a 10x20, despite the latter being easier to lease.
• Diversify Unit Sizes: While small units maximize revenue, a facility needs a variety of sizes to accommodate different customer needs. Units in the 10x10, 10x15, and 10x20 range should be included, but not overrepresented.
• Limit Large Units: Large units (10x20, 10x30, and bigger) may seem like great income generators, but they often sit vacant longer and can hurt overall occupancy. A single vacant large unit consumes a significant portion of your rentable square footage and reduces economic occupancy.

Using Feasibility Studies and Competition Reviews

Before finalizing your unit mix, a feasibility study is essential to understand market demand. This includes:

• Analyzing Competitor Unit Mix: Look at competitors’ pricing, occupancy rates, and unit size distribution. If small units in your market have high occupancy, that’s a sign of strong demand.
• Identifying Gaps in the Market: If a competitor lacks 5x5 or 5x10 units and demand is high, you can fill that gap.
• Understanding Local Demand: Urban areas often need smaller, climate-controlled units, while suburban and rural markets may favor larger drive-up spaces.

Maximizing Net Rentable Square Footage Before Construction

To ensure you’re maximizing revenue, plan your facility layout meticulously:

• Efficient Hallway Design: Wasted hallway space reduces the rentable area. Narrower corridors and strategic layout planning can maximize unit counts.
• Minimize Dead Space: Optimize building shapes and avoid irregular corners that can’t accommodate units.
• Utilize Double-Loaded Corridors: In multi-story buildings, placing units on both sides of a hallway increases rentable space.
• Consider Mezzanines for Climate-Controlled Spaces: If ceiling height allows, adding a mezzanine can significantly increase rentable square footage.

Avoiding the Pitfalls of Large Units

While large units are necessary, they should be limited. The drawbacks of large units include:

• High Vacancy Risk: They appeal to fewer customers and often sit empty longer.
• Revenue Volatility: If a tenant in a 10x30 vacates, it can take longer to backfill compared to leasing multiple smaller units.
• Increased Delinquency Impact: A delinquent 10x30 unit can hold up a large chunk of rentable space. If it remains delinquent for months before auction, your dollar per square foot income takes a hit.

Understanding and Improving Economic Occupancy

Economic occupancy refers to the revenue a facility generates relative to its physical occupancy. A facility that is 90% physically occupied but only earning 75% of its potential income has an economic occupancy problem. Strategies to improve this include:

• Maximizing Dollar Per Square Foot Pricing: Set rates based on demand, not just size. Small units often yield the best rates.
• Frequent Rate Adjustments: Adjust pricing based on market conditions and occupancy trends.
• Reducing Delinquency: Implement strict payment policies and leverage automated reminders to minimize non-paying tenants.
• Avoiding Over-Reliance on Discounts: Deep move-in discounts may fill units quickly but reduce revenue potential.

A Well Planned Unit Mix Makes You More Profit!

A well-planned unit mix balances revenue potential with market demand. Prioritizing smaller units, using data to guide decisions, maximizing net rentable square footage, and minimizing the risk of large unit delinquency will help you achieve a high economic occupancy and maximize your facility’s revenue. By being proactive in planning and execution, you can ensure your self-storage facility is both profitable and resilient in any market condition.