As a self-storage broker, I frequently engage with developers to assess project feasibility and provide opinions of value.
An integral component of the analysis process is to determine market asking rates for modelling purposes — rack rate, street rate, GPR, whatever you prefer!
Without a fully designed unit mix, gauging an average asking rate can be challenging. A back of the envelope approach is to assume that 9sqm units form the core of your mix. You can then broadly benchmark asking rates by comparing the price for 9sqm units within your submarket. The shortfall to this approach is that it does not properly account for the weighted average price of drive-up, ground level, and upper-level units, which charge varying premiums based on demand and convenience.
For a more precise analysis, it’s preferable to develop a theoretical unit mix. We can then assess all available units within the submarket, across each level type, to derive a weighted average asking rent for the subject site.
Calculating floor ratios and unit dimensions can be a time consuming exercise, so we have a free Unit Mix Generator available for download at the link below.
While this proxy approach is in no way representative of what the final unit mix will be, it is a framework that allows us to better assess asking rate performance within the submarket.
Our next post will expand on our approach to pricing analysis and how we can integrate market rents into the unit mix.