[2024] How Long It Takes to Lease Up A Self Storage Facility

January 30, 2024

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5 min

We all wish that we could lease a new storage facility up in a year or two.

Unfortunately, that’s just not the reality for most facilities as we head into 2024 and beyond.

Between increased saturation across the U.S. self storage market and a decline in demand from the peak of the pandemic, we’re looking at a different lease-up landscape than we were a year or two ago.

In this article, we’ll talk about the current lease-up trajectory for new storage facilities. We’ll also cover what industry factors are contributing to longer lease-ups, talk about at least one way to soften the lease-up period, and provide some third-party expert testimony.

Let's get started!


What Does Leasing Up Even Mean?

Before we continue, let’s define what we are talking about so that we’re on the same page.

Leasing up doesn’t mean filling every single self storage unit.

How long it takes to fill your storage facility is different than how long it takes to lease up.

What is leasing up?

The lease-up period for a storage facility is simply how long it takes for your facility to reach stability. How long until you’re in the black?

For many facilities, that might be 80%. For others with incredible financing, it could be 20%!

OK, 20% is pretty unlikely. But your stability goals are very specific to your self storage business.

If you paid cash for a facility and it only takes 10% occupancy to cover all of your expenses? Well, that’s a pretty quick and easy lease-up.

How Long Does it Take to Lease Up a Storage Facility?

This is the big question, and it’s why we’re here: How long should your lease-up period last?

36 months—or about three years—is a safe expectation.

But don’t take just my word for it! Listen to what Alyssa Quill (Storage Asset Management) and Jeremy Rollwitz (The Jenkin’s Organization) had to say on the topic:

 

 

You can check out the entire hour-long recording right here. They had a lot of great things to say!

As they explain in the video above, the real answer for your facility will depend on a wide variety of factors, such as your market’s saturation, street rates, and your given goals.

A more competitive market could mean a slower lease-up, for example.

How the Industry’s Climate Impacts Lease-Up

There are many reasons why leasing up a facility today is taking a bit longer than a couple of years ago.

Well, really, there’s one BIG reason. The boom we recently experienced was a once-in-a-career kind of thing.

But there are lots of little reasons that stem from or are related to that one big reason.

Here’s a quick glance at some of those reasons (with many of them being related in some way):

  • More competition
  • Lower street rates
  • Less demand
  • Tighter financing

At the peak of the summer of 2021, we saw an all-time high in demand and booming street rates as a result.

During this time, more and more facilities were being added.

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While today’s demand is still above pre-pandemic levels, it has dropped from the 2021 peak. This, combined with the added supply in many markets, has led to more fierce competition than in the past.

And fierce competition leads to a slower lease-up.

Marketing and the Lease-Up Period

How you choose to market your facility can also impact the length of your lease-up period.

For example, if you enter a market where the competition is running Google search ads, and you choose not to run ads, you can expect to get less than your share of the market's storage customers. This can lead to a slower-than-predicted lease-up period.

This concept extends to other forms of marketing, as well. Even how visible your signage is can impact when you reach the point of stability at your facility.

As it always is, marketing during your lease-up can be a fine line to balance. Running Google ads in a competitive market can help you fill storage units faster, but it also means each unit rented will bring less return and move the needle a little bit less.

Find the right balance for your facility and your lease-up goals.

Check out our top self storage marketing ideas for some additional help!

How to Soften Long Self Storage Lease-Ups

Not looking forward to taking three years to stabilize your storage facility?

To wrap up the article, let’s talk about how you might be able to mitigate the lease-up period for your facility.

There are some things you can do to help soften the blow. Usually, this comes in the form of alternative revenue streams that supplement the rent roll.

Sell Moving Supplies On-Site

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While selling moving and packing supplies isn’t an enormous source of income, it is still income.

Any profit made from the sales can help take the place of rent from tenants you haven’t landed.

It will also help if you (or your manager) are skilled at sales. This way, you can maximize your product sales and bridge that gap even further!

Add Rental Trucks

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Whether you rent out your own trucks or add a larger operation such as U-Haul or Penske, this is a way for you to gain income from a source entirely unrelated to your storage units.

Many people will rent trucks even when not renting a storage unit. So in a way, this is doing more than just softening your lease-up period; it’s diversifying your clientele.

Office Rentals

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Offering office space rentals is another good way to diversify your customer base and bring in income that isn’t necessarily dependent on the trends in the storage industry.

These customers are also often more reliable and stay for longer periods of time, so they’re a good supplement while you’re trying to fill in storage units.

Boat and RV Storage

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If you have open land on your property that can be used for easy vehicle storage, this is a way for you to bring in rent without having to build more storage units.

Boat and RV storage also tends to be popular in the colder seasons (relative to traditional storage, anyway). This means a successful vehicle storage push will help even more during self storage’s slower seasons.

Check out our guide to owning boat and RV storage to give you some further insight!


Want more advice for getting started with your new facility? Here are some other great posts to help!

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