Self-storage underwriting is the process of analyzing a storage facility's unit mix, occupancy, street rates, and operating expenses to determine its income potential and investment value. Unlike multifamily, self-storage underwriting requires tracking unit types (climate-controlled vs non-climate, drive-up vs interior), seasonal rate fluctuations, and competitor pricing within a 3-5 mile radius.
Self-storage has become one of the most actively traded alternative asset classes, attracting institutional capital alongside traditional mom-and-pop operators. But the underwriting process differs significantly from apartments or office.
This guide walks through the complete underwriting process, from unit mix analysis to NOI calculation, with the data sources and formulas you need to evaluate any storage facility.
What Makes Self-Storage Underwriting Different?
Self-storage underwriting is fundamentally different from multifamily because there are no long-term leases. Every tenant is month-to-month, which means revenue can shift faster in both directions.
Three characteristics define the storage underwriting challenge:
Month-to-month tenancy
There are no 12-month leases to model. Every customer can leave with 30 days notice. Occupancy and revenue can swing 10-15% in a single quarter. This makes trailing actuals far more important than pro forma projections.
Seasonal demand cycles
Moving season (May through September) drives peak occupancy and rates. College towns spike in August and May. Winter months see higher vacancy and lower street rates. As one storage operator put it: "Gross potential rent changes literally every month."
Unit type complexity
A single facility can have five or more unit types with different rate structures: "Climate control or non-climate, first, second floor, and sometimes drive up units." Each type commands a different rate per square foot and has different demand characteristics.
These factors mean you cannot simply take a multifamily underwriting model and apply it to storage. The revenue side requires granular, unit-type-level analysis that accounts for rate volatility and tenant churn.
Key Self-Storage Unit Types
Every storage facility is a collection of unit types, each with its own rate, demand profile, and cost structure. You must underwrite each type separately, then roll up to the facility level.
| Unit Type | Typical Sizes | Typical Rate/SF/Mo | Key Notes |
|---|---|---|---|
| Climate-Controlled Interior | 5x5 to 10x30 | $1.20 - $2.00 | Highest rate/SF. Popular in humid and extreme-temp markets. Higher build cost. |
| Non-Climate Interior | 5x5 to 10x20 | $0.80 - $1.40 | Multi-story buildings without HVAC. Lower operating cost than climate. |
| Drive-Up | 10x10 to 10x30 | $0.70 - $1.20 | Ground-level with roll-up doors. Vehicle access. Most common type nationally. |
| Covered Parking / RV | 10x20 to 12x40 | $0.40 - $0.80 | Covered canopy for vehicles, boats, RVs. Low build cost, low rate, low churn. |
| Uncovered Parking | 10x20 to 12x40 | $0.20 - $0.50 | Open lot spaces. Lowest revenue/SF but near-zero build and maintenance cost. |
Rates vary dramatically by market. The figures above represent national averages. In dense coastal markets, climate-controlled rates can exceed $3.00/SF/month. In rural markets, drive-up units may rent for $0.50/SF/month.
According to the Self Storage Association (SSA), climate-controlled units now represent over 40% of new supply nationally, reflecting consumer demand for premium storage options.
What Is the Difference Between Street Rate and Market Rate?
Street rate is what the subject facility advertises right now for a new move-in. Market rate is the median asking rate across all competitors within the trade area. You need both numbers to underwrite accurately.
| Dimension | Street Rate | Market Rate |
|---|---|---|
| Definition | Price advertised by the subject facility today | Median rate across competitors in the trade area |
| Source | Facility website, SpareFoot listing, or OM | Store Track, Radius+, manual comp survey |
| Volatility | Changes weekly or daily based on occupancy | More stable, reflects broader supply/demand |
| Use in underwriting | Benchmarks current pricing strategy | Anchors pro forma revenue assumptions |
| Gotcha | May include introductory discounts (first month free) | Comps may be different quality or vintage |
Sophisticated operators use street rates as a dynamic pricing lever. When occupancy exceeds 90%, they raise street rates to slow move-ins and capture rate. When occupancy drops below 85%, they lower rates and offer promotions to drive volume.
For underwriting, use market rate as your baseline revenue assumption. Then adjust based on the subject's competitive position: newer facilities with better locations and amenities can price 10-20% above market, while older facilities may need to discount.
The 6-Step Self-Storage Underwriting Process
Follow these six steps to underwrite any self-storage acquisition. Each step builds on the previous one, culminating in an NOI-based valuation.
Step 1: Analyze the Unit Mix and Current Occupancy
Start with the rent roll or unit mix summary from the OM. Break every unit into its type (climate, non-climate, drive-up, parking) and record size, current rate, and occupancy status.
Calculate occupancy by unit type, not just for the facility overall. A facility at 90% total occupancy might have 98% occupancy on 10x10 climate units and 70% on 10x30 drive-ups. That matters for rate-setting and capital planning.
Step 2: Pull Competitor Rates
Identify every competing facility within a 3-5 mile radius. For each competitor, record unit sizes offered, street rates by size, occupancy (if available), facility age, and whether they offer climate control.
Primary data sources include Store Track (rate history and trends), Radius+ (trade area mapping and new supply pipeline), and SpareFoot (real-time street rates). Some operators also use Google Maps to identify facilities and then scrape rates manually from websites.
Step 3: Calculate Revenue Per Available Square Foot (RevPAF)
RevPAF is the single most important metric in self-storage. It captures both rate and occupancy in one number, allowing you to compare facilities of wildly different sizes and unit mixes.
RevPAF = Annual Rental Revenue / Total Rentable SF
RevPAF = $480,000 / 50,000 SF = $9.60/SF/yr
Compare your subject's RevPAF against competitors. If the subject is significantly below market RevPAF, there may be operational upside through better pricing, marketing, or management. If it's above market, question whether current rates are sustainable.
Step 4: Model Seasonal Rate Adjustments
Do not use a single annual rate assumption. Self-storage revenue fluctuates month to month based on seasonal demand, and annualizing a peak month (or a trough month) will distort your projections.
Pull trailing 12-month rate and occupancy data. If the subject facility does not provide monthly data, use market-level seasonal patterns from Store Track or the Marcus & Millichap Self-Storage Research as a proxy.
Pro tip: model monthly, not annually
Build your pro forma with 12 monthly columns, each with its own rate and occupancy assumption. Sum to get the annual figure. This gives a far more accurate picture than a single blended annual rate.
Step 5: Apply Expense Assumptions
Self-storage operating expenses are lower than multifamily as a percentage of revenue, but they vary significantly by management style and facility type. Here are the major expense categories:
| Expense Category | Typical Range (% of EGI) | Notes |
|---|---|---|
| Management fee | 5 - 6% | Third-party management. Self-managed facilities still need an imputed cost. |
| Property taxes | 8 - 15% | Highly market-dependent. Check for reassessment risk on acquisition. |
| Insurance | 2 - 4% | Rising in coastal and flood-zone markets. Verify current quotes. |
| Utilities | 3 - 8% | Climate-controlled facilities have significantly higher utility cost. |
| Payroll | 8 - 15% | Depends on staffing model. Kiosks and automation reduce labor costs. |
| Marketing / advertising | 2 - 5% | Google Ads, SpareFoot listings, signage. Higher for lease-up. |
| Repairs / maintenance | 2 - 5% | Lower than multifamily. Primarily doors, roofing, and pavement. |
A well-run self-storage facility typically operates at a 35-45% expense ratio. Poorly managed or self-managed facilities may show artificially low expenses that will normalize under institutional ownership.
Step 6: Calculate NOI and Value at Market Cap Rate
With revenue and expenses modeled, calculate Net Operating Income (NOI). Then divide by the appropriate cap rate to arrive at value.
NOI = Effective Gross Income - Operating Expenses
Value = NOI / Cap Rate
Value = $320,000 / 0.06 = $5,333,333
Always run the valuation at multiple cap rate scenarios (25-50 basis point increments) to understand sensitivity. A 50 bps cap rate swing on a $320K NOI facility changes value by nearly $500,000.
Key Metrics for Self-Storage Valuation
These are the metrics every self-storage underwriter should calculate. Together, they paint a complete picture of facility performance and investment potential.
| Metric | Formula | Why It Matters |
|---|---|---|
| RevPAF | Revenue / Total Rentable SF | Apples-to-apples facility comparison. Captures rate and occupancy together. |
| RevPOF | Revenue / Occupied SF | Shows effective rate being achieved on rented units. |
| Physical Occupancy | Occupied Units / Total Units | Basic demand indicator. Target: 85-92% for stabilized facilities. |
| Economic Occupancy | Actual Revenue / Gross Potential Revenue | Accounts for discounts and concessions. Often 3-8% below physical. |
| Price Per SF | Purchase Price / Total Rentable SF | Quick sanity check. Varies widely: $40-$60 for drive-up, $80-$150+ for climate. |
| Cap Rate | NOI / Purchase Price | Primary valuation metric. 5.0-7.5% range for most markets in 2026. |
| Expense Ratio | Operating Expenses / EGI | Target: 35-45%. Above 50% signals operational inefficiency or capital needs. |
Use the cap rate calculator to quickly test different valuation scenarios, and the pro forma template to build out full multi-year projections.
Self-Storage Comp Data Sources
Accurate comp data is the backbone of storage underwriting. No single source covers everything, so most operators combine two or three platforms. Here is how the major sources compare.
Store Track
The most widely used rate data platform in the industry. Tracks street rates, occupancy estimates, and rate trends for thousands of facilities. Best for: historical rate data, pricing benchmarks, and trend analysis. Limitation: distance and drive-time calculations are less precise than mapping-focused tools.
Radius+ (formerly Radius+/The BSM)
Strongest for geographic analysis and new supply tracking. Shows every facility on a map with drive-time trade areas, plus planned and under-construction supply. As one operator noted: "We pull from Store Track for most data except distance, because Radius+ is much better at distance." Best for: trade area definition, supply pipeline, and competitive mapping.
SpareFoot
A consumer-facing aggregator where tenants search and reserve units. Useful for verifying real-time street rates and promotional pricing. Best for: current street rate verification, move-in specials, and consumer demand signals. Limitation: not all facilities list on SpareFoot, so coverage varies by market.
The data challenge in self-storage is merging and deduplicating information from multiple sources. The same facility may appear under slightly different names or addresses across platforms. Reconciling these datasets manually is tedious but necessary for accurate comp analysis.
Industry benchmarking data is also available from Inside Self-Storage, which publishes annual surveys on rates, occupancy, and operating metrics by region and facility type.
Common Mistakes in Self-Storage Underwriting
Even experienced underwriters make these errors when transitioning from multifamily or office to self-storage. Avoid these to produce more accurate valuations.
Ignoring seasonality
Using a single annual average rate masks the reality that revenue swings 10-20% between peak and trough months. If you underwrite based on summer rates, you will overstate annual revenue. If you use winter rates, you will understate it. Always model monthly.
Blending climate and non-climate units
Climate-controlled units rent at 30-50% premiums over non-climate units. Averaging all units together produces a rate that is too high for non-climate and too low for climate. Underwrite each type separately and roll up to the facility total.
Overlooking new supply in the trade area
Self-storage has seen significant new construction since 2018. A new 80,000 SF competitor opening within 3 miles can depress occupancy by 5-10% and force rate concessions. Always check the supply pipeline using Radius+ or local planning records before underwriting revenue growth.
Not adjusting expenses for management transition
Owner-operated facilities often show no management fee, below-market payroll (owner working for free), and commingled personal expenses. Under institutional ownership, you need to add a 5-6% management fee, market-rate payroll, and proper insurance. Failing to normalize expenses overstates NOI by 10-15%.
Using asking price per SF as the only valuation check
Price per square foot is a useful sanity check, but it does not account for revenue quality, occupancy trends, or expense structure. A $50/SF facility generating $12/SF RevPAF is a better deal than a $40/SF facility generating $6/SF RevPAF. Always anchor to income-based valuation.
How Primer Handles Self-Storage Documents
Self-storage OMs and rent rolls are uniquely complex: multiple unit types, rate tables that change monthly, and comp data from three different platforms that never quite match. Primer extracts unit mix data from any OM or rent roll format, deduplicates comp data across sources, reconciles conflicting rate information, and maps everything directly into your underwriting model. Every extracted number is cited back to the source document, page, and table.
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