Small units cost more per foot than large ones, so the average depends entirely on what it is weighted by.
Divide the rent the whole mix would bill by its total rentable area, never average the per-foot rates. On an illustrative 550-unit store of 33,300 sq ft, six unit sizes priced from £60.00 down to £23.00 a sq ft a year bill £1,047,500 at full occupancy, an average of £31.46 per sq ft. Averaging the rates unit by unit gives £38.58, 22.7 per cent too high, because most units are small and most of the area is not.
Worked in full in Self-Storage Real Estate by Julian R. Sterling, with every figure reproduced in a free workbook.See the book on Amazon →
Self-storage is priced per unit, and small units cost far more per square foot than large ones. A locker at £50.00 a month and a 200 sq ft container at £383.33 a month both look reasonable to a customer, yet one is £60.00 a foot and the other £23.00. Any average across the mix has to say what it is weighted by, and only one weighting reconciles to the rent roll.
| Unit type | Units | Size, sq ft | Rate £/sq ft | £ a month | Occupancy | Area | Rent at 100% |
|---|---|---|---|---|---|---|---|
| Locker | 80 | 10 | 60.00 | 50.00 | 70% | 800 | 48,000 |
| Small | 120 | 25 | 45.00 | 93.75 | 90% | 3,000 | 135,000 |
| Medium | 140 | 50 | 36.00 | 150.00 | 92% | 7,000 | 252,000 |
| Large | 100 | 75 | 31.00 | 193.75 | 90% | 7,500 | 232,500 |
| Extra large | 70 | 100 | 28.00 | 233.33 | 86% | 7,000 | 196,000 |
| Container | 40 | 200 | 23.00 | 383.33 | 76% | 8,000 | 184,000 |
| Store | 550 | 60.5 | 31.46 | 158.71 | 86.1% | 33,300 | 1,047,500 |
The total row shows the average unit size (60.5 sq ft), the area-weighted rate, the average rent per unit per month and occupancy by unit count. Lockers and small units are 36 per cent of the units but only 11.4 per cent of the area, and they carry 17.5 per cent of the rent.
Average rate = Σ(units × size × rate) ÷ Σ(units × size)
= 1,047,500 ÷ 33,300 = £31.46 per sq ft a year
In Excel, with units in B, size in C and rate in D: =SUMPRODUCT(B2:B7,C2:C7,D2:D7)/SUMPRODUCT(B2:B7,C2:C7). The wrong version is =SUMPRODUCT(B2:B7,D2:D7)/SUM(B2:B7), which weights each rate by the number of units.
| Method | £/sq ft | Rent it implies on 33,300 sq ft | Overstatement |
|---|---|---|---|
| Weighted by area (rent ÷ area) | 31.46 | 1,047,500 | 0.0% |
| Simple average of the six rates | 37.17 | 1,237,650 | 18.2% |
| Weighted by unit count | 38.58 | 1,284,775 | 22.7% |
Applied to the store's area, the count-weighted rate would promise £237,275 of rent a year that no unit on the plan can bill. Even after operating costs, capitalised at an illustrative 6 per cent cap rate that is millions of pounds of value, which is why the definition matters in a pack.
Occupancy differs by size, so the rate on the space actually let is not the rate on the whole store. Here small and medium units are 90 to 92 per cent full, lockers 70 and containers 76. Weighting each line by its occupancy gives:
The shortcut of area occupancy times the area-weighted rate gives £898,082, and unit occupancy times full rent gives £901,612. Both miss the mix effect. Computed line by line the answer is £904,590, and it is the only one that ties to a rent roll.
Because small units earn more per foot, operators repartition large space when demand allows. The table converts area at an illustrative £15.00 per sq ft of partitioning cost, holding the building at 33,300 sq ft and street rates unchanged.
| Case | Units | Rate £/sq ft | Occupied rent | Change | Payback, months |
|---|---|---|---|---|---|
| Base mix | 550 | 31.46 | 904,590 | 0 | - |
| 20 containers into 160 small, let at 90% | 690 | 34.10 | 996,670 | 92,080 | 7.8 |
| Same, new small units let at 60% | 690 | 34.10 | 942,670 | 38,080 | 18.9 |
| 30 extra large into 60 medium | 580 | 32.18 | 931,710 | 27,120 | 19.9 |
| Both conversions | 720 | 34.82 | 1,023,790 | 119,200 | 10.6 |
Splitting 4,000 sq ft of containers lifts the store's average rate from £31.46 to £34.10 and, if the new units fill like the existing small ones, adds 10.2 per cent to occupied rent with a payback under eight months. That is the case for repartitioning, and also its trap: the 160 new units need 144 extra customers. If local demand only fills them to 60 per cent, the gain falls to £38,080 and the payback stretches to 18.9 months. The rate per foot rises mechanically; the rent only rises if the customers exist.
Check before you trust a mix change. Smaller units also turn over faster, so each conversion adds move-ins, marketing and admin per foot. Test the new mix against the store's own waiting list and the occupancy of its smallest units, not against the rate card.
The usual error is averaging the per-foot rates across units, which is what a spreadsheet does when someone types =AVERAGE() over the rate column or weights by unit count. Lockers and small units dominate the count, so the result is pulled towards their high per-foot prices: £38.58 here against a true £31.46. The same error appears when a buyer benchmarks a store's per-foot rate against a competitor with a different mix. A store with more small units will always show a higher rate per foot without being better priced. Compare rates size by size, and quote the store average only as rent divided by area.
The average rent per square foot of a self-storage store is total rent over total rentable area: £31.46 on this mix, not the £38.58 a unit-weighted average gives. Compute it at full occupancy and on the occupied area, state which, and compare stores size by size. The free companion workbooks for the book build the rent roll from a six-size tape in the same way, and how to calculate REVPAF carries the occupied rent through to revenue per available foot.
Customers buy a unit, not a square foot, and the fixed cost of a door, a corridor and a transaction is spread over less space. In the illustrative store a 10 sq ft locker lets at £60.00 a foot, £50.00 a month, while a 200 sq ft container lets at £23.00 a foot, £383.33 a month. The locker is cheaper to rent and far dearer per foot.
Rate per occupied foot divides the rent billed by the area let: £904,590 over 28,550 sq ft is £31.68 in the example. Revenue per available foot divides the same rent by the whole 33,300 sq ft, £27.16. The first measures pricing, the second pricing and occupancy together.
It raises the rate per foot mechanically, from £31.46 to £34.10 when 20 containers become 160 small units, but rent only rises if the new units let. At 90 per cent occupancy the gain is £92,080 a year; at 60 per cent it is £38,080 and the conversion takes 18.9 months to pay back.
This article is one calculation from Self-Storage Real Estate. The book takes the same case from first principles to the decision, chapter by chapter, and every figure it prints is a live formula in the free companion workbooks.
Get the book on Amazon →Free companion files
Also on Amazon UK · Amazon Germany · Amazon France · Amazon Canada
Reading guide: real estate investing, finance and fund management → · All 1340 articles →
If this book helped, or didn’t, a few lines on Amazon are worth more than they look: they are what the next reader goes on. Write a review. The workbook stays free either way.