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4 THE 2017 SELF-STORAGE EXPENSE GUIDEBOOK

Welcome to the 2017 Self-Storage

Expense GuideBook. First published in 2004, the

Expense GuideBook was the result of many requests for additional expense information above and beyond what was traditionally presented in the Self-Storage

Almanac. Over the past 12 years, it has become one of the most sought after products produced by MiniCo Publishing.

Just as we continue to refine the scope of the Self-Storage Almanac, so do we strive to continually improve the scope of the data in the

Expense GuideBook. As such, we would like to offer a very special thank you to Aaron Swerdlin, Executive Managing Director of NGKF Capital Markets Self Storage Group, and Kate Spencer, Managing Director of Self Storage at Cushman & Wakefield, for their partnership and invaluable contribution to this project. Their insight into industry trends and data helped to make this edition possible.

Once again in this year’s edition you will find the overall expense to income ratio on a national basis, as well as overall facility income and rental revenue growth and the traditional expense data broken down into more precise categories.

It is important to note that the data in this edition is not collected on a same store basis; therefore, the numbers represent an average based on the facilities that responded to the 2017 Expense GuideBook Survey and partner data.

For additional self-storage data and statistics, we suggest that you look to the 2017 Self-Storage Almanac and the many other educational products offered by MiniCo Publishing. Above all, we hope you find this edition of the Expense GuideBook to be a valuable tool with which to pursue your self-storage endeavors.

Publisher’s Note

PUBLISHERPoppy Behrens

PRODUCTION MANAGERJeffry Pettingill

EDITORErica Shatzer

ADVERTSINGSALES EXECUTIVE

James Appleton(800) 824-6864

PUBLISHING COORDINATORSamantha Traina(602) 308-6340

CIRCULATION & ONLINE SALES COORDINATOR

Ginger Coates(800) 352-4636

SUBSCRIPTION SALES& CUSTOMER SERVICE

(800) 352-4636

WEBSITESwww.ministoragemessenger.com

www.minico.com • www.aranins.com

[email protected]

Unsolicited manuscripts, artwork and photographmust be accompanied by an addressed return

envelope and the necessary postage.Publisher assumes no responsibility

for the return of materials.

© 2017 MiniCo Insurance Agency, LLC.

All rights reserved. Reproduction in whole orin part without written permission is prohibited.

Printed in the United States.

Poppy Behrens –Publisher

THE 2017 SELF-STORAGE EXPENSE GUIDEBOOK 5

The 2017 Expense GuideBookFor more than 38 years, real estate professionals, investors, brokers, owners, managers, researchers, appraisers, govern-

mental agencies, and market observers across the country have turned to MiniCo’s publications to answer questions about

self-storage data, statistics, and information. First published in 2004, the Self-Storage Expense GuideBook was the result of

numerous requests from readers of the annual Self-Storage Almanac who were looking for additional information regarding

operating expense data for self-storage properties.

Since its inception, the Expense GuideBook has become the industry’s leading source of self-storage operating expense

information, offering ranges and averages by region in the major facility expense categories. Once again partnering with the

self-storage team at Newmark Grubb Knight Frank, we are proud to present the 2017 Expense GuideBook, offering valuable

industry expense information in a new format, which includes newly defined categories as designated in the map below:

The 2017 edition of the GuideBook is based upon responses from owners and operators of self-storage properties, nation-

wide. Important to note is that the statistical base does not include data from any large operators—including any of the publi-

cally traded companies. Therefore, it is important to note that the context of this data is more consistent with owners and

operators of small portfolios of properties, or even just one property, and does not reflect significant economies of scale. We

believe that this dynamic makes the data extremely relevant on an individual basis. Moreover, it also provides a dataset against

which the publically reported operating data can be compared; and from that the economies of portfolios may be gleaned.

FLORIDA

ALABAMA

MARYLAND

CALIFORNIACOLORADO

CONNECTICUT

DELAWARE

ARKANSAS

GEORGIA

IDAHO

IOWA

KANSAS KENTUCKY

LOUISIANA

MAINE

MASSACHUSETTS

MICHIGAN

MINNESOTA

MISS

MISSOURI

MONTANA

NEBRASKA

NEVADA

NEW HAMPSHIRE

NEW JERSEY

NEW YORK

NORTHCAROLINA

NORTH DAKOTA

OHIO

OKLAHOMA

OREGON

PENNSYLVANIA

RHODE ISLAND

SOUTH CAROLINA

SOUTH DAKOTA

TENNESSEE

TEXAS

UTAH

VERMONT

VIRGINIA

WEST VA

WASHINGTON

WASHINGTON D.C.

WISCONSIN

WYOMING

INDIANA ILLINOIS

NEW MEXICOARIZONA

WEST / SOUTHWEST SOUTH MIDWEST SOUTHEAST EAST


Occupancy Data

Both economic and physical occupancy data were collected as seen in Table 1. Based upon the consolidated responses, when

measured against the published data from large operators, significant upside exists in the operating performance of privately

operated facilities. Although discounts and rent concession data was not collected, based upon the variance between physical

and economic occupancy, it is likely that the variance is an indication of where the respective region operates with discounts

and concessions. And although this is one way to interpret the data, other factors influence the variance, such as average length

of stay, aggressiveness of rate increases on existing tenants, frequency of street rate increases, and delinquent rent recovery.

Make-Up Of IncomeFacility income is reflected in Tables 2 and 3. As seen in Table 2, income generated at a facility, excluding rent revenue, is a

major contributor to profit. Managing the other income sources, and recognizing the impact on NOI, is critical to maximizing

the profitability of the facility. Again, keeping in mind that a majority of respondents operate as small or one-off operators,

contrasting these categories (especially the tenant insurance income) to the large operators, the potential for revenue growth

in non-rent categories exceed incremental amounts.

Rental Rate GrowthSurvey respondents were asked to provide rental revenue for the first and last month of a 12-month period. Based upon

the representative growth, the regions all performed at above-GDP growth with rental income as seen in Table 4. The highest

rental rate growth was reported for the Southeast and West/Southwest regions, with the Midwest and South seeing the lowest

growth rate.


Expenses

Definitions Of Expenses

Tables 5 through 8 reflect self-storage facility expense information in two categories. The following are represented as

administrative expenses:

• On-site Management • Property, Liability, and Casualty Insurance • Real Estate Taxes

• Administrative Expenses • Management Fees

The second category includes the following other expenses:

• Advertising / Technology • Phone Costs • Utilities

• Postage & Handling / Office • Other Miscellaneous Expenses • Maintenance & Repairs

• Credit Card / Bank Charges

In general, as seen in this year’s tables, property operating expenses were observed to be relatively consistent across regions,

fluctuating most in payroll and real estate taxes for the East, and administrative expenses in the Southeast. Insurance costs also

saw a wide spread between the West/Southwest and the Midwest.

The purpose of the 2017 Expense GuideBook is to provide a foundation or benchmark for analyzing operating expenses.

Therefore, it is important to note that expenses can vary widely, particularly when analyzed solely on a single unit of analysis

such as per square foot of rentable building area. Therefore, we offer the following clarification on some of the expenses listed

above:

• On-Site Management – On-site management expenses account for full-time management including assistant managers,

relief managers, and payroll-related costs. In today’s self-storage industry, hiring quality managers is essential, especially given

their direct impact on rental rates, occupancy, and ancillary income such as merchandise sales.

• Administrative Expenses – In this category, expenses relate to office functions such as dues, subscriptions, copy

machine, office supplies, printing, professional fees including legal services (eviction costs), data processing, travel expenses,

partnership professional fees (legal and accounting), local licensing and permit fees, computer hardware and software, and

other expenses incurred in the operation of a self-storage property.


Definitions Of Expenses (continued)

• Insurance – Insurance includes property, liability, and casualty insurance expenses. Due to the significant variables involved

when underwriting insurance, lower rates may in some cases be achieved by blanket policies with significant rate reductions.

Therefore, unless there are special circumstances such as portfolio analysis, insurance rates are typically forecast for a single

property. Other items that must be considered when seeking insurance are property specific technology in fire, life, and

safety construction and design.

• Management Fee – This category includes either:

1. Any costs associated with a third-party management service, or

2. All general and administrative costs associated with expenses at the corporate office for a facility operated by

vertically integrated ownership.

The cost allocation to this expense generally covers salaries, accounting staff, corporate systems, and all of other corpo-

rate office expense. Generally, it is charged to the property as a percentage of collected gross revenue.

• Real Estate Taxes – Taxes account for real property taxes only. In most forecasts of income and expenses, real estate

taxes are adjusted to market value according to an iterative process that multiplies market value against the tax rate. As a

result, there tends to be a “lag effect” in the data which results in current taxes being somewhat higher than those indicated

in the historical data. As such, it is imperative that local tax statutes are carefully analyzed and considered when estimating

property taxes.

Other expenses that may require clarification are:

• Utilities – This expense category includes natural or propane gas, electricity, water, sewer service, and regular trash ser-

vice. The age of the facility can have an impact on this category especially given that many newer sites utilize motion detec-

tors to control lighting, thereby reducing utility costs. Moreover, single-level facilities with drive-up access only will have

lower utility costs than multi-story facilities with indoor/elevator access.


Definitions Of Expenses (continued)

• Maintenance & Repairs – This expense category will be influenced by the age of the facility, the quality of construction,

and overall condition of the property. Actual expenses may include but are not limited to items such as:

• Electrical repairs

• Elevator maintenance and repairs

• Gate maintenance and repairs

• Landscaping

• Pest control

• Plumbing repairs

• Other – This category of expenses primarily accounts for all other variables. It is used as a catch-all for miscellaneous

expenses that vary between sites, are infrequently used, and do not match the other categories. Amounts in this category

typically account for less than 10 percent of the total expenses at a given property.

Data Methodology NotesAll of the information, where appropriate, has been averaged using a weighted approach. Also included with each table

is a breakdown of the data on a per-square-foot basis. Deviations of gross amounts begin to materially diverge when using

rentable square feet multipliers that differ more than 9,000 square feet from the weighted average of the respective region,

especially as it relates to non-controllable expenses.

• Roll-up door maintenance and repairs

• Roof repairs and maintenance

• Security system, alarms, and monitor maintenance

• Site clean-up

• Trash removal


Table 2 – Average Facility Income

Storage Rental Fee Net Goods Sold Miscellaneous TotalRegion Income Income and Insurance Income Revenue

West/Southwest $877,963.25 $39,852.73 $6,845.04 $16,288.35 $940,949.36East $1,216,966.04 $47,405.90 $13,749.15 $17,844.01 $1,295,965.10Midwest $572,723.61 $38,702.76 $22,021.57 $4,671.79 $638,119.73South $668,382.34 $32,868.32 $26,254.97 $16,203.75 $743,709.37Southeast $591,176.34 $31,454.09 $25,424.03 $41,587.91 $689,642.37National $785,442.32 $38,056.76 $18,858.95 $19,319.16 $861,677.19

Overall Expenseto Income Ratio*

41.01%* National Average

Tables

Table 1 – Facility Information

Total Net Rentable Sq. Ft. Average / Economic Physical Avg. Units /Region Per Property Occupancy (1) Occupancy (1) Per Property

West/Southwest 75,551 79.63% 85.83% 624East 74,810 81.89% 89.01% 576Midwest 70,716 79.10% 83.93% 552South 70,005 78.69% 88.35% 497Southeast 65,382 73.74% 88.92% 439National 71,293 78.61% 87.21% 538

(1) Weighted Average


Table 3 – Average Facility Income Per Square Foot

Storage Rental Fee Net Goods Sold Miscellaneous Total Average Achieved RentRegion Income Income and Insurance Income Revenue Per Occupied Sq. Foot (2)

West/Southwest $11.62 $0.53 $0.09 $0.22 $12.45 $13.54East $16.27 $0.63 $0.18 $0.24 $17.32 $18.27Midwest $8.10 $0.55 $0.31 $0.07 $9.02 $9.65South $9.55 $0.47 $0.38 $0.23 $10.62 $10.81Southeast $9.04 $0.48 $0.39 $0.64 $10.55 $10.17National $11.02 $0.53 $0.26 $0.27 $12.09 $12.63

(2) Weighted average per rented square foot

Table 4 – Rental Income Growth

Month 1 Rental Month 12 Rental Rental RevenueRegion Revenue Revenue Growth

West/Southwest $53,619.62 $59,108.12 10.24%East $53,322.91 $58,644.92 9.98%Midwest $42,809.66 $45,425.78 6.11%South $42,828.68 $46,098.37 7.63%Southeast $29,481.08 $33,344.61 13.11%National $44,412.39 $48,524.36 9.26%

Tables (continued)

Table 5 – Facility Administrative Expenses

On-Site Management Administrative Property / Liability / Management Real EstateRegion (All-in Costs) Expenses Casualty Insurance Fee Taxes

West/Southwest $76,689.57 $30,126.10 $16,127.01 $56,348.84 $72,462.41East $93,473.94 $29,122.01 $12,342.48 $79,860.40 $149,742.24Midwest $59,427.26 $26,101.93 $6,214.86 $37,573.59 $65,605.39South $64,150.24 $22,847.13 $11,742.12 $42,702.01 $75,906.93Southeast $64,692.80 $19,950.05 $12,863.15 $39,381.64 $55,121.86National $71,686.76 $25,629.44 $11,857.92 $51,173.29 $83,767.77


Table 8 – Other Expenses Per Square Foot

Advertising / Postage & Credit Card / Phone MaintenanceRegion TechnologySpend Handling/Office BankCharges Costs Other Utilities &Repairs

West/Southwest $0.22 $0.12 $0.15 $0.11 $1.28 $0.24 $0.30 East $0.30 $0.07 $0.14 $0.05 $0.23 $0.44 $0.57 Midwest $0.19 $0.06 $0.12 $0.11 $0.02 $0.18 $0.33 South $0.23 $0.05 $0.12 $0.06 $0.10 $0.34 $0.26 Southeast $0.25 $0.04 $0.08 $0.05 $0.09 $0.37 $0.28 National $0.24 $0.07 $0.12 $0.08 $0.35 $0.31 $0.35

Table 7 – Other Expenses

Advertising / Postage & Credit Card / Phone MaintenanceRegion TechnologySpend Handling/Office BankCharges Costs Other Utilities &Repairs

West/Southwest $16,809.04 $8,935.72 $11,149.11 $8,220.05 $96,625.92 $18,015.13 $22,741.91East $22,634.44 $5,592.36 $10,679.07 $3,849.98 $17,327.50 $32,939.98 $42,617.74Midwest $13,403.63 $3,926.32 $8,134.44 $7,494.55 $1,663.33 $12,913.13 $23,248.51South $16,106.50 $3,711.16 $8,172.28 $4,168.02 $7,231.22 $23,564.12 $17,972.40Southeast $16,352.96 $2,533.76 $5,409.00 $3,341.06 $6,174.89 $24,097.90 $18,323.32National $17,061.31 $4,939.87 $8,708.78 $5,414.73 $25,804.57 $22,306.05 $24,980.78

Tables (continued)

Table 6 – Facility Administrative Expenses Per Square Foot

On-Site Management Administrative Property / Liability / Management Real EstateRegion (All-in Costs) Expenses Casualty Insurance Fee Taxes

West/Southwest $1.02 $0.40 $0.21 $0.75 $0.96 East $1.25 $0.39 $0.16 $1.07 $2.00 Midwest $0.84 $0.37 $0.09 $0.53 $0.93 South $0.92 $0.33 $0.17 $0.61 $1.08 Southeast $0.99 $0.31 $0.20 $0.60 $0.84 National $1.00 $0.36 $0.17 $0.71 $1.16

We have what you need. Published since 1979, the Mini-Storage Messenger has become the most respected international trade magazine for self-storage operators, owners, developers and investors. Each monthly issue delivers a valuable mix of self-storage business news, research data and interviews, as well as reports on various aspects of the development, management and marketing of pro�table self-storage facilities.

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