Street rate versus in place rate, and how the gap opens over three years
Every self storage owner knows the impact of street rates. That's the price new renters see online or on your sign. But across most facilities, long term tenants pay far less than those advertised rates. This difference between the posted street rate and the "in place" rate is often the largest single hole in your monthly revenue.
Three years is long enough for a big gap to form. Street rates usually rise with demand, inflation, or local competition. Existing customers, however, often see little to no increase. It is common for a tenant who moved in three years ago to be paying twenty percent or more below current street rates. Multiply that by dozens or hundreds of units, and the annual shortfall can run into the tens of thousands of dollars for a 300-unit facility.
This revenue loss is not always obvious. Payments arrive on time, occupancy looks good, and the focus stays on filling empty units. But when you compare the potential income if everyone paid street rates, the missing revenue becomes clear. Owners who close this gap see a strong boost to their bottom line, without having to add a single new customer.
Keep reading: Climate Controlled Versus Drive Up Units: Build Cost, Rent, and Upkeep
Pulling the tenancy list: length of stay, unit type, and discount history
The first step is to pull a detailed report of your current tenants. Most management software lets you export a spreadsheet with names, unit numbers, move-in dates, current rate, and discounts. This list is your starting point for planning increases.
Grouping by length of stay
Sort tenants by how long they have been with you. Common tenure bands are less than one year, one to two years, and more than two years. The longer the stay, the bigger the possible rate gap.
Factoring in unit type
Next, look at unit types. Five by five climate controlled units fill and turn over differently than ten by thirty drive-ups. Some unit sizes may have a waiting list, while others drag on occupancy. Break your list down further by size and features.
Discounts and specials
If you have offered move-in specials or long term discounts, note who still receives them. Some tenants stay on an old promotion for years. Flag these, as they may need a different approach.
Setting increase percentages by tenure band instead of one flat number
It is tempting to send a five percent increase to everyone at once. That approach can backfire, especially for newer tenants who just started paying your advertised rate. Instead, tailor increases by how long each customer has been in place.
Higher increases for long-term tenants
Customers who have not seen a raise in two or more years can usually handle a larger bump. These tenants are often well below market and less likely to move over a single increase, especially if they have invested time or money into using the unit.
Small or no increase for recent move-ins
Tenants within their first year are already near street rate. A small increase or none at all keeps them happy and avoids complaints about broken promises. Save bigger increases for a later cycle.
Unit demand and occupancy
For units with high occupancy or a waiting list, you can be more aggressive. For slower moving unit types, take a lighter touch. The key is to avoid a flat increase that hits low-margin or new tenants the same as your most underpriced.
Keep reading: Move In Mistakes That Sink Storage Lien Sales and Damage Claims
Notice periods: what your lease says and what your state requires
Every state regulates how much notice you must give before a rate increase. Most require thirty days, but some mandate forty-five or even sixty. Some leases also spell out specific notice periods or renewal terms. Before you send any letters, double check both your lease and your state's statute.
If your lease is silent, default to state rules. Always give written notice, mailed or emailed depending on your standard practice. Many owners add a few extra days to account for postal delays or weekends. Failing to provide adequate notice can force you to postpone the increase or, in the worst case, refund an overcharge.
Clear communication of the effective date is critical. Include the new rent amount, the old rent, and the date the change takes effect. Avoid legal trouble by sticking to the higher of lease or state notice, and documenting when each letter goes out.
Writing the increase letter and choosing an effective date that does not land on a holiday
The rate increase letter does much of the heavy lifting. Keep it short, direct, and polite. State the reason for the increase simply: rising costs, property improvements, or aligning with current market rates. Thank tenants for their business and highlight any upgrades or improvements you have made recently.
Avoid technical details or a defensive tone. Most tenants understand that costs go up over time. What matters is that the new amount and the date are clear. Include your contact number for questions, but do not encourage negotiation in the letter itself.
Choosing the right effective date
Set the increase to start after your required notice, but check that the effective date does not fall on a major holiday or the end of December. Rate increases that hit near Thanksgiving, Christmas, or other busy periods can feel like a slap in the face to customers and can increase the risk of move outs or complaints.
It is often better to set the effective date for the first rental period starting after the notice window, and to avoid Fridays or weekends if you require in-person payments or have limited office hours. Consistency and predictability help tenants accept the change.
See how GateCodeDesk handles this for self storage
Handling the phone calls: hold, roll back, or transfer to a smaller unit
No matter how carefully you plan, some tenants will call to complain or threaten to move out after getting an increase notice. Have clear scripts and options for your staff or yourself.
When to hold firm
If a tenant is still well below street rate, or if you have high occupancy in that unit type, it pays to hold firm. Politely explain the reason for the increase, reference current market rates, and remind them of your facility's features.
When to roll back
Long-term, prompt-paying tenants in marginal unit types, or those with special circumstances, may warrant a partial roll back. Offering a lower increase or delaying it by a month can save a good customer without giving away the farm.
Downsizing to a smaller unit
Some customers balk at paying more but do not want to leave. Offer to move them to a smaller or less expensive unit, if available. This keeps occupancy up and helps the tenant feel you are working with them, rather than against them.
Document every exception or adjustment you grant. Over time, you will learn which calls are serious and which are just venting. Training your staff to handle these conversations calmly and consistently is essential.
Measuring the result with move out rate, net revenue, and the payback month
After the dust settles, measure the impact of your increases. Three metrics matter most: move out rate, net revenue, and the payback month.
Move out rate
Track how many tenants leave in the first sixty days after the increase. A spike in move outs can signal that your increase was too steep or poorly timed. Compare with your typical monthly attrition for a true picture.
Net revenue
Calculate the new monthly rental income, subtracting for lost tenants. This figure is what really matters. In most cases, the net gain outweighs the loss from a few move outs, especially if you fill vacated units at the new street rate.
Payback month
Figure out how long it takes for the extra income to offset any initial vacancy losses. For example, if you lose three tenants at eighty dollars each, but collect an extra eight hundred dollars a month from the increases, you make up the difference in less than one month. After that, the additional income is pure gain.
Review results after each round. Over time, you will develop a sense for what your market can bear.
Building a rotating schedule so increases happen every month, not every year
Many facilities fall into the habit of annual or even less frequent increases. This creates a tidal wave effect: a big batch of letters, phone calls, and move outs all at once. There is a better way.
Instead, set a monthly or quarterly schedule. Review a portion of tenants each month, focusing on those who have gone the longest without an increase. This smooths out the workload, reduces stress on staff, and keeps revenue growing steadily.
A rotating approach avoids sudden shocks to occupancy and cash flow. Tenants grow accustomed to small, regular adjustments, rather than big jumps. This also lets you correct course more quickly if you spot problems.
Tools that automate rate analysis, send notices, and track unit availability make this process much simpler. Online leasing platforms with automated gate code management and integrated delinquency controls free up office time and reduce errors, helping small operators keep up with larger competitors without extra overhead.
