Market radius: The area surrounding a self-storage facility in which the facility is competing for customers. According to the National Self Storage Association, 95 percent of the average facility’s tenants either work or live within a 3- to 5-mile radius. As the number of facilities increase, the radius decreases. Additionally, the density of the market area and natural barriers such as bridges, bodies of water, freeways, etc., also have an impact on a facility’s market radius.
Net operating income (NOI): Income minus expenses before taxes or debt service.
Net rentable square feet: The number of square feet of the facility allotted for rental units. (Does not include hallways, office, lobby or common areas, maintenance or electrical rooms, etc.)
Physical occupancy: The number of square feet of the facility that is rented.
Potential rent: The dollar figure the facility is expected to bring in each month based on the current tenants and current rental rate. (Assumes everyone pays their rent.)
Traffic reporting or lead sourcing: This has a number of different names but the point is to track and measure where your leads and tenants originate, answering the all-important question: “How did you hear about us?” question. Tracking is critical to determine what is working in your marketing plan so you can be more efficient with your advertising dollars.
Unit occupancy: The percentage of units rented at a facility. Example: Total 700 units with 546 rented. 546 divided by 700 = 78 percent unit occupancy.
Vacancy rate: Percentage of the facility not yet rented; the opposite of occupancy. (Example: Total 700 units with 546 rented = 78 percent unit occupancy, 22 percent vacancy rate. 700 divided by 546 = 154; 154 divided by 700 = 22 percent.)
You will encounter these and many more terms in your self-storage career. Learn them, understand them fully, or ask others to explain them clearly until they make perfect sense. Remember: Knowledge is power. Understand the above terminology and it will empower you and your self-storage business.
Linnea Appleby is president of PDQ Management Solutions Inc., a Sarasota, Fla.-based company that provides full-service facility management, consulting, startup services, auditing, management training and more. She is also the managing director for the Florida Self Storage Association. For more information, call 941.377.3151; visit www.pdqmanagementsolutions.com.