By Brett Copper
Operating a profitable self-storage business is dependent on setting the right rental rates and managing occupancy levels. In many industries, selling 100% of a product or service would be a home run. However, in the self-storage world, a 100% occupancy rate can signal a missed opportunity to optimize revenue. Balancing occupancy rates with rental pricing is key to maximizing returns. Additionally, understanding the dynamics of occupancy can empower storage facility operators–of traditional self-storage as well as RV/boat storage–to make more strategic pricing decisions.
Now enter a storage question as old as time: If my facility is fully occupied, does that mean I should raise rents? The answer is YES! However, there are plenty of factors, calculations and methods for doing so. We’ll dive into why occupancy rates and thoughtful pricing strategies are crucial for profitability.
Unlocking Revenue Potential: The Case for Less Than Full Occupancy
Why 100% Occupancy May Signal a Need for Adjustments
A fully occupied storage facility may look successful at a glance. After all, if every unit is filled, there is clearly high demand in your market. However, while 100% occupancy indicates strong interest, it also means that your rates are too low. Most successful storage facilities aim to hover below full occupancy at a level that balances tenant retention with the ability to adjust rates for incoming tenants.
The Downside of Being Fully Occupied
When every unit is occupied, you don’t have any room to adjust rates for new tenants. If your facility remains at full occupancy without any natural turnover, it may suggest that your rates are lower than what the market can bear. In contrast, targeting an occupancy level slightly below full capacity allows you to create room for rate adjustments that better reflect current demand and market conditions. It is a good thing to have inventory for new tenants. Longer-term tenants typically moved in at rates that are lower than the current market rates. That means new rentals for highly occupied facilities should be at street rates higher than the tenants leaving originally paid. There are also additional revenue streams for renting units, like admin fees or new insurance penetration from tenants that previously did not acquire insurance.
Industry Benchmark and Ideal Occupancy Levels
According to data from Storable, the national average occupancy rate hovers around 85%. However, most successful operators aim for an optimal occupancy range. This target range has always been right around 91-93%. Recently, with new market conditions and lower 
national occupancies, this target has slightly dropped to around 88-91%. The REITs have long figured out this is the optional balance between a perfect amount of rate increases coupled with perfect dynamic pricing that ensures capitalizing on the best income possible. At this level, your facility can capitalize on demand without leaving revenue on the table, ensuring there are still opportunities for new tenants at higher rental rates.
Optimal Occupancy Rate for Maximum Profitability
Once your facility reaches a certain level of stabilization, typically around 85-90% occupancy, operators have the flexibility to introduce more aggressive rate increases for existing tenants. This approach aligns your facility’s pricing with market demand and maximizes revenue potential. Every facility is different and it’s important to remember that there are all sorts of strategies that might work for different sites.
Tenant Longevity and Rent Increases: Best Practices
Balancing Occupancy With Rate Adjustments
Operators have different strategies for adjusting rental rates based on occupancy levels. Initial, smaller rate increases typically start coming into play anywhere from 30-60% occupancy depending on the Operator’s preferences and local market. If your lease up is ahead of schedule, it can make sense to start capitalizing on rate increases earlier on that scale. Conversely, for a facility that is underperforming, holding on rate increases until physical occupancy increases might be the better call.
Adjusting Based on Market and Length of Stay
An additional factor to consider is the length of a tenant’s stay. Many operators apply rate increases every six-12 months, timing them according to each tenant’s move-in date. For long-term tenants, incremental increases of 8-15% are generally accepted, allowing the facility to keep pace with market rates while minimizing turnover. These increases also help cover rising operational costs and maintain profit margins.
As stated earlier, deciding where to fall on this spectrum has a lot to do with preferences, operational strategies and market conditions. The REITs typically like to be much more aggressive by drastically lowering initial rental rates then making much higher initial rate increases within the first three to six months. No matter which strategy works for you, you must be dynamic and willing to adjust as your market and tenant base changes.
When and How To Raise Rents
Implementing a regular schedule for rent adjustments is one of the most effective ways to stay in sync with market conditions. Rental rate increases should be considered routine and 
expected by tenants. By setting predictable intervals for increases, you avoid surprising tenants with sudden hikes, which can lead to a higher turnover. Consistent and transparent communication with tenants fosters trust and loyalty. It is much easier to push through rate increases when your facility is in great condition, clean and well kept.
It is important to strive for good customer service and a secured property to ensure a higher level of comfort for tenants to accept rate increases. Make sure you are giving tenants at least a 30-day written notice that they will be receiving a rate increase. Some states require physical mailed notices while others may only require an email notice. If you are uncertain whatsoever about your state laws, check with your state self-storage association for clarification.
Determining Rate Increase Percentages
The percentage of the increase is equally important. Operators usually aim for a safe range of 8-15%, a level that aligns with industry averages and maintains competitiveness with nearby facilities. Being consistent with these percentages helps you build trust with tenants, who appreciate gradual increases over unexpected, larger hikes.
You can be as dynamic and in-depth with these as you want. For instance, for tenants who rent multiple units from you, it might make sense to slightly discount their rate increases to lower the impact on that single tenant. It can also be important to look at the specific sizes each tenant rents and to have higher percentages for unit sizes that are in high demand.
Aggressive Increases at Stabilization
When occupancy reaches the stabilization range (80%+), operators can implement larger rate adjustments more freely. This is because demand at this level is steady, and a few tenants leaving has a much smaller effect on overall revenue, where rate increases overall have a much higher impact on revenue. By maximizing rates within this occupancy range, you capture revenue potential while ensuring unit turnover remains manageable.
Using Move-In and Move-Out Data To Inform Pricing Decisions
Monitoring move-in and move-out patterns can help operators anticipate trends and adjust pricing as needed. For instance, if you notice a trend of high move-outs following a rate increase, it may indicate that the percentage increase was too aggressive. Conversely, if move-ins spike following a rate reduction, this could suggest a need to increase prices to prevent over-occupancy gradually. Effective pricing strategies are responsive to both demand and tenant behavior, allowing facilities to stay competitive while optimizing revenue.
Strategic Occupancy Over 100% Occupancy Wins
A strategic approach to occupancy management is essential, focusing on high occupancy rates and tenant retention. Ultimately, the goal is to find the sweet spot where occupancy and rental rates support sustained profitability. With regular rate reviews, a strategic approach to occupancy, and consistent tenant communication, self-storage operators can optimize their facilities for long-term success and maximize their profit potential.
Brett Copper grew up in the self-storage industry under his father’s tutelage, working with a leading self-storage consulting firm since he was a teenager. Seeing a growing need for alternative management solutions in the industry, he and the rest of the Copper family launched Copper Storage Management, which has become one of the largest (non-REIT) third-party management companies specifically catering to remote storage facilities. Copper Storage Management currently manages approximately 200 facilities nationwide and continues to grow at an unprecedented rate. The Coppers have also acquired and sold large portfolios of unmanned facilities under the brand Copper Safe Storage.
