What does normal occupancy really look like?

A lot of people still underwrite self storage like it is 2021. That is dangerous.

REIT weighted occupancy peaked at 96.6 percent in Q2 2021, while non-REIT occupancy peaked at 90.0 percent. By Q4 2024, occupancy had bottomed at 90.4 percent for REITs and 80.9 percent for non-REITs. The lesson is not that storage is broken. The lesson is that pandemic-era occupancy was not normal. If a seller presents peak occupancy as stabilized performance, buyers should normalize the numbers. A good underwriting model should account for seasonality, local supply, concessions, and the difference between physical and economic occupancy. While delinquent units present an opportunity for accounts receivable, they should not be counted as normal physical occupancy. We consider any unit greater than 60+ days as a vacant unit because they are less likely to come current, and a properly followed lien and auction process will result in an empty unit within 60 days usually.