For this Field Note, we wanted to share some observations on a topic that comes up frequently in our day-to-day operations across the portfolio — the balance between occupancy and rental rate growth.
In the self-storage business, it is easy to focus on occupancy as the primary measure of performance. While occupancy is important, our experience over multiple cycles has shown that long-term value is driven more by disciplined rate management than by simply trying to keep facilities full at all times.
Because most of our projects are located in high-growth suburban markets, we often see strong demand early in the lease-up phase. The natural temptation in those periods is to prioritize occupancy and push units out the door as quickly as possible. In practice, however, we have found that maintaining pricing discipline during lease-up usually produces better results over the life of the asset, even if it means moving a little slower in the short term.
This approach became especially important during and after COVID, when demand for storage increased rapidly and many operators raised rates aggressively. In the years since, the industry has gone through a period of normalization, with new supply in certain submarkets and more price-sensitive customers. Facilities that relied solely on occupancy without building a strong rental rate base have generally felt more pressure during this period.
Across our portfolio, we continue to focus on a few consistent principles:
- Push rates when demand allows, even if it slows leasing
- Use existing customer rate increases as a key driver of NOI growth
- Avoid competing purely on price when we believe the location supports stronger rents
- Stay patient during slower periods rather than resetting the market downward
One advantage we have today is that most of our facilities are located in outer suburban corridors where population growth is still strong and new supply tends to be more limited than in urban infill markets. While leasing velocity can fluctuate month to month, the long-term demand trend in these areas continues to be favorable.
We are currently seeing this play out across several properties where occupancy is stable but revenue continues to grow through rate adjustments and tenant churn. In many cases, this type of steady improvement in NOI ultimately has a larger impact on value than short-term swings in occupancy.
As with many parts of our business, the goal is not to maximize any single quarter, but to position the asset for the strongest possible performance over the full hold period.
