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Self-Storage in the Southeast 2010: Real Estate Snapshot

Michael L. McCune Comments
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2. Has there been any major shift in occupancy or rental rates in the Southeast states? What are the current self-storage rental rates in your major market areas?

Allen Barnhill: In speaking with owners and managers throughout Georgia, we’ve found, on average, occupancy and rental rates are down but not dramatically. Many owners have continued to add customers and hold steady on rental rates. Common factors for these facilities are good location, supporting demographics, viable local economy and strong management. Climate-controlled 10-by-10 units range from $90 to $125 per unit, and 10-by-10 non-climate-controlled units range from $50 to $75 per unit.

Bill Barnhill: With the exception of some specific overbuilt markets, rental rates have generally held steady, although more concessions are being offered. Overall economic rental rates are lower by as much as 10 percent in some areas. In the Florida Panhandle, a 10-by-10 climate-controlled unit will bring $100 to $125. Regular outside units are in the $60 to $65 range.

DeStefano: Of the 10 properties we’re managing or actively marketing for sale in South Carolina, the general trend has been a drop in occupancy of 5 percent to 10 percent. Rates, however, have held steady. The actual performance is reflective of proactive facility management. We have a couple of facilities that have actually experienced rate and occupancy growth over the past 12 months, while competing facilities have seen declines.

Godbold: Owners in North Carolina are indicating that occupancy rates are down somewhat, depending on local market conditions such as unemployment and general demographics. Many managers report a loss in the vicinity of 10 percent from 2007 occupancy rates. That, however, is compounded by an increasing problem with collections.

Many operators are being more lenient with evictions and lien sales as they try to retain tenants—often long-term and loyal tenants. We have not seen operators move to decrease quoted rates, though many are offering specials.

Riggs: In the mid-Atlantic states, occupancy rates are down across the board 10 percent to 15 percent as economics are forcing customers to shed expenses. Rental rates haven’t really changed, but owners are giving more concessions like free rent or even free one-day truck-rental rebates for new customers.

Weaver: There has been a significant downward shift in occupancy in some areas in North and Central Florida. This has been impacted by the lack of new housing starts and self-storage tenants who’ve vacated their units for economic reasons. Rental rates have been maintained, but many facilities are offering discounts as an incentive to new tenants.

For class-A properties, a 10-by-10 standard unit is $65 per month, and a 10-by-10 climate-controlled unit rents for $80 per month. In the smaller markets, the rental rates are typically 10 percent to 15 percent less. 
Michael L. McCune is president of the Argus Self Storage Sales Network, a national network of real estate brokers who specialize in self-storage. Argus provides brokerage, consulting and marketing services to self-storage buyers and sellers and operates, a marketing medium and information resource for facility owners. For more information, call 800.55.STORE. 

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