Are Climate-Controlled Units Really Worth It?
Imagine you have a piece of land that is perfect for self-storage development. The visibility is unmatched off a major highway, the population density is high, the zoning is in place, and there aren’t any competitors looking to build self-storage near your site anytime soon. You’ve done your due diligence and are ready to build.
Now, how do you create the most efficient unit mix that maximizes profit and provides what customers are looking for? Do you build non-climate-controlled units that all have drive-up access? Or do you build a multistory building where all units are climate-controlled? Developers face these types of questions every day. Below we will unpack the value proposition of climate-controlled self-storage units as well as provide data on climate-controlled premiums across all the major MSAs.
Climate-controlled self-storage units provide a unique service to customers with special needs. Customers who store valuable items such as antiques, appliances, artwork, documents, instruments, or furniture benefit from climate-controlled storage options as these special items could be damaged in extreme temperatures or humidity.
Naturally, a customer is charged more for the use of a climate-controlled unit. According to the SSA 2023 Self Storage Demand Study, over 30% of renters are willing to pay more for a climate-controlled unit. So, developers should only build climate-controlled units since they make the most money, right? It depends. Constructing climate-controlled facilities is more costly than constructing traditional facilities. In addition, it’s important to understand your trade area and if customers are looking for a climate-controlled storage product. If climate-controlled storage is undesirable in your area, then you won’t be able to charge enough to justify the extra cost to build climate-controlled storage.
TractIQ aims to provide investors with the best data to make the best decisions. Below are the top 5 MSAs where climate-controlled rates are achieving the highest premium over non-climate-controlled rates. We’ve also included the bottom 5 MSAs where climate-controlled rates aren’t achieving much, if any, of a premium over non-climate-controlled rates. We’ve used a unit size of 10×10 and average street rates from February 2024 – January 2025.
Top 5 MSAs | Average CC Premium | Bottom 5 MSAs | Average CC Premium | |
Shreveport-Bossier City, LA | 73.22% | San Francisco-Oakland-San Jose, CA | -7.38% | |
Huntsville-Decatur-Albertville, AL | 51.67% | Portland-Salem, OR-WA | -3.68% | |
Midland-Odessa, TX | 40.15% | San Diego, CA | 0.24% | |
Memphis, TN-AR-MS | 40.02% | Baltimore-Towson, MD | 0.25% | |
Tulsa, OK | 31.32% | Seattle-Tacoma-Bremerton, WA | 0.63% |
It’s no surprise that high humidity areas like Louisiana and Alabama top the list of markets with the highest climate-controlled premium. On the flip side, areas with mild climates in California and the northwest aren’t commanding a premium for climate-controlled units. Interestingly, in San Francisco, non-climate-controlled units have higher advertised rates, suggesting that customers don’t see a significant value-add from using climate-controlled storage. Although difficult to confirm, this could also mean there is an oversupply of climate- controlled units. Below is a full list of MSAs and associated climate-controlled rate premiums. Next time you are thinking of building climate-controlled units, take a look at the data to see if the juice is worth the squeeze.
