Unit mix on a stabilized self storage facility: drive-up or climate control

The tenure number is the part I'd chase. Eight months of extra average stay across 30 units is worth more than the rate premium is, once you price what a turn actually costs you in vacant days plus the lock plus the ad spend. I'd want to see whether that 19 months is the mix of customers or the mix of units though. If your climate section happens to hold the small 5x5s that people use for documents and boxes, you're measuring customer type and calling it construction type.

Run the HVAC age before you fall in love with the premium. A converted front building usually comes with the rooftop units it was converted with, and if those are 14 years old, replacing a single one can eat the entire annual climate premium for that section and then some. If the seller's 41 cents a foot does not have a reserve in it, that expense line is fiction.

I'd want the competitor board before voting. If the two facilities within four miles are both all drive-up, the climate premium in that submarket is uncontested and you're the only one with the product. If one of them has 200 climate units at 90 percent, the premium is already discovered and you're buying into a race. Bramble, do you have their rate sheets pulled over more than one week?

Something worth separating out. The interesting question isn't which mix is better, it's what you're paying for the existing climate units in the purchase price. If the seller has capitalized the premium at the same cap rate as the drive-up income, you're buying a maintenance liability at a premium multiple. I'd underwrite the climate income at a wider cap than the metal rows and see whether the price still works. If it does, take the mix as it comes and don't spend the conversion money at all until you've held it a year and watched the demand yourself.

The version that never generates a service call is the one to want, and the drive-up rows look better on every line that matters for that. No compressors or condensate to manage, and no thermostat complaints in August.

Marlow, that is an easy trap to fall into, and it does not hold up all the way. Drive up is cheaper to hold, and it is also the first product to get undercut when someone builds a cheap row of steel two exits down. Climate is the harder thing to replicate. The hybrid got my vote because nobody can predict which of those risks shows up first in a market where nobody is moving houses. Bramble, what is the physical occupancy split between the two sections right now? That would tell us more than the rate premium does.