October 1, 2004

3 Min Read
National Operating Performance Reports

National Operating Performance Reports

Data contributed by Charles Ray Wilson

Performance Précis is a new quarterly column based on thedetailed findings of Self Storage Data Services Inc. and its newly developedNational Operating Performance Reports. The complete reports, available via paidsubscription, give account of how self-storage is performing in the nationstop 50 MSAs (Metropolitan Statistical Areas). These findings are unprecedented,and Inside Self-Storage ispleased to be the exclusive host of quarterly previews.

The operating performance for most types of real estate ismeasured by studying the revenue generated per square foot. Hotel real estateanalysts coined the phase RevPar, which stands for revenue per available room. Regardlessof the type of real estate, the goal is the same: to measure operatingperformance over time.

The technique used to measure performance in self-storagefacilities is simply to multiply the asking rental rate by the facilitysphysical occupancy. The result is an index called rent per occupied unit, and it is used to judge performance in the current quarter vs.the same quarter in the prior year, thus accounting for seasonality. Forinstance, if the asking rent for a 100-square-foot unit is $75 per month and thephysical occupancy is 90 percent, the rent per occupied unit would be $67.50.

This number is used to compare performance to prior periodsand is referred to as the rental rate impact as shown below. Whileconcessions and rental discounts have a direct impact on revenue, they vary inamount depending on the unit size; and they are offered infrequently dependingon occupancy, thus they are difficult to measure.

Performance Reports Published

Using the data available, Self Storage Data Services Inc.(SSDS) started measuring the performance of the 100-square-foot units in thenations top 50 Metropolitan Statistical Areas (MSAs) during the fourthquarter of 2003. The company is now publishing the results on a quarterly basis.

The table below reflects the operating performance offacilities nationwide. Detailed reports are also available for each individual MSA,which allow the analysis of market conditions down to the county level. It also allows comparison of the relative performance of onemetropolitan area to another.

The following table illustrates how the Miami/Ft.Lauderdale/Miami Beach, Fla., MSA performed. Note the premium for upper-level,climate-controlled units vs. non-climate-controlled units: 54 percent. However,note the continued downward trend in rental rates for those units. In theOrlando, Fla., MSA, the trend is just of opposite, but the premium is lower.

Sample Size

All too often, articles that report trends in rental rates andoccupancy use results based on statistically insignificant sample sizes. SSDS has made every effort to use a substantial samplingtechnique. The margin of error is estimated to be within plus or minus2.7 percent.

The companys quarterly findings are based on anapproximately 25 percent sample of the 17,000 facilities in the top 50 markets. To gain a better understanding of the physical characteristicsof the marketplace, it collected data from 6,902 facilities during the secondquarter of this year, which represented about 41 percent of the facilities inthe top 50 MSAs. (See chart below.)

The new operating performance reportsare a first for the self-storage industry. Their real benefit lies in theirability to follow market trends over time. To developers, they offer currentdata on performance trends to assist in the development decision. They provideconstruction lenders an unbiased source of information. To owners and investors, they offer a benchmark by which tojudge performance.

Self-storage will continue to be built. Now, however, owners,developers, lenders and investors have a source of data on which to base their investment decisions.

Self Storage Data Services Inc. (SSDS) is a market-researchcompany specializing in the publication of site-specific and market-performancereports for the self-storage industry. SSDS maintains the nations largestdatabase of self-storage operating statistics. For more information, visitwww.ssdata.net.

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