Self-Storage REIT In-Place Rents are 15.6% Higher than Average Advertised Rents

According to TractIQ’s Q3 Self-Storage REIT Report, existing storage customers continue to show little resistance to ECRIs (Existing Customer Rate Increases). 

Each of the 4 self-storage REITs expressed cautious optimism heading into 2025 while remaining vigilant in operations during a challenging economic and housing environment.

Key REIT Report Findings

• Bid-ask spreads between buyers and sellers are narrowing for acquisitions
• The customer remains resilient as evidenced by higher average length of stays, strong credit, and insensitivity to price changes (ECRIs)
• REIT Rent Per Occupied Square Foot Versus Street Rent (since 3Q23):
  • REIT advertised rates have decreased -20.8%, and rent per occupied square foot has decreased 2.0% since Q3 2023.
  • ExtraSpace’s advertised rates have dropped -59.9%, while rent per occupied square foot fell -4.2%.
  • CubeSmart’s advertised rates have risen 8.6%, while rent per occupied square foot has stayed the same.
  • Public’s advertised rates have fallen -18.5%, while rent per occupied square foot slipped -2.1%.
• The new customer market remains extremely competitive, as evidenced by large deltas between move-in rates and move-out rates:
  • ExtraSpace’s same-store average move-in rate was $121 per unit for the quarter versus a move-out rate of $175 (~30% higher)
  • Public’s same-store average move-in rate was $14.45 PSF for the quarter versus a move-out rate of $20.81 (~30% higher)
• New supply continues to be less and less of a headwind for the industry:
  • In 2019, 50% of CubeSmart’s stores were affected by new supply.
  • In 2024, 27% of CubeSmart’s stores were affected by new supply.

Lastly, ECRIs remain crucial to revenue management strategies.

According to Noah Starr, CEO of TractIQ, “REITs are using their advertised rates as a smokescreen to lure in customers at a low price before aggressively increasing prices. Due to the sticky nature of self-storage, customers historically have been able to absorb these price increases; however, the proliferation of ECRIs risks killing the golden goose and lessening the future demand of storage.”

Although ECRIs are prevalent across the board, each REIT has a slightly different implementation strategy resulting in premium differences. 

Breakdown of the 15.6% premium across each REIT:

1. Extra Space in-place rates are 26.7% above their advertised rates
2. Public Storage in-place rates are 3.0% above their advertised rates
3. CubeSmart in-place rates are 19.9% below their advertised rates

To learn more, download TractIQ’s Q3 2024 Storage REIT Report.