Podcast Summary: Self Storage Income – Ep. 301

Title: How Your Facility Can Make MORE Money with LOWER Occupancy (w/ Jonah Hall)
Host: AJ Osborne
Guest: Jonah Hall (President, Cedar Creek)
Date: June 17, 2025

Overview

This episode of the Self Storage Income podcast tackles a somewhat counterintuitive but powerful topic in self-storage operations: how facility owners can increase revenue and value even as occupancy declines. Host AJ Osborne welcomes returning guest Jonah Hall, President of Cedar Creek, to break down real-world examples, strategic concepts, and actionable operational insights. The discussion focuses on revenue management, occupancy metrics, technology integration, market dynamics, tenant quality, and the compounding effects of these variables on long-term wealth in self-storage.

Key Discussion Points & Insights

1. The Opportunity in Declining Occupancy

[00:00 – 05:43]

• Reactive vs. Strategic Thinking: Owners tend to panic when occupancy drops, but strategic managers see opportunity.
  • Quote: “You can actually create opportunity in a time of decline if you're strategic about everything else.” – Jonah, [00:00]
• Case Study – Oklahoma City Market:
  • Facility dropped from 75% to 70% occupancy in 12 months, but revenue per available unit increased from $59 to $70 (+15%).
  • Strategic rent increases during low occupancy created inventory that could be leased at premium rates in peak season.
  • “If you didn’t have that unit to rent because you were still renting it at lower rates, you really gave up the value of the leasing season.” – Jonah, [04:37]

2. Occupancy Metrics Demystified

[06:18 – 10:14]

• Types of Occupancy:
  • Physical Occupancy (by unit count and square footage)
  • Economic Occupancy (revenue relative to potential)
• Differences between these can be striking—they need to be interpreted in context.
  • Example: New 975-unit facility had 9% by unit, ~11–13% by square footage, but 18% economic occupancy due to high-value RV and large unit rentals. [08:13]
• “It's very easy to lose track of this if you're not in the industry every day looking at it. But your smaller units rent for much higher rates per square foot.” – Jonah, [10:14]

3. Revenue, Market Forces & Development

[10:14 – 14:56]

• Market Studies Are Critical:
  • Thorough, granular market studies are vital to understanding what unit sizes to build or convert.
  • “No two unit sizes are created equal—each has its own supply and demand curve.”
• Bank/Lender Perception vs. Market Reality:
  • Banks may push for unit mixes (e.g., smaller units) that look de-risked on paper but do not reflect real demand.
  • “Banks, you know, they're a little behind on how things work. Occupancy means a lot to them. A lot. And to operators. We know revenue really drives it more than occupancy.” – Jonah, [12:05]

4. Occupancy Games & Unit Mix Failures

[16:37 – 20:43]

• “You can be overbuilt. If you look at even our portfolio or anybody else's, the vacancies in your facilities are almost always two, maybe three sizes at a 12 or 14.” – AJ, [16:37]
• Overbuilding less-desirable sizes (e.g., too many 5x5s in a rural market) leads to persistent vacancies.
• Adaptive operators convert excess small units to larger sizes to meet true market demand.

5. Pricing, Demand, and Market Granularity

[21:15 – 26:29]

• Unlike multi-family, self-storage is not a homogeneous product; pricing and demand must be managed by unit type and micro-market.
• “Two miles one way, the rate goes to over $2 a square foot. The other way it goes to 80 cents. ...On 100,000 square feet, that is astronomical.” – AJ, [22:53]
• External factors like HOAs have a significant impact on storage demand, especially for larger units and RV storage.

6. Demand Signals & Seasonality

[28:05 – 30:30]

• Indicators of Real Demand:
  • Rising street rates (even if occupancy is flat or falling).
  • Population/housing growth and square foot per capita measures.
  • “If rates are consistently going up, that's a good driver... Now they haven’t been for months anywhere.” – Jonah, [28:29]
• Seasonal/Transient Demand:
  • College towns explode with demand during move-out months, but operators must avoid being left with high fall vacancies or low-value tenants.

7. Knowing Your Customer & Maximizing Lifetime Value

[32:25 – 36:16]

• Operators must know their churn metrics and lifetime customer value to maximize revenue.
• Seasonality and tenant “avatars” (types) differ by unit—marketing and pricing must reflect both the average stay and value per segment.
• “If you're not, you need to be messing with rates to figure out how to get [lifetime value] there.” – Jonah, [34:02]

8. Curating Your Tenant Base

[37:01 – 42:41]

• Not all tenants are created equal—high churn and delinquency can be mitigated by:
  • Requiring autopay
  • ID verification
  • Eliminating cash payments
  • Automating rental processes
• “We literally just say no, [to some tenants]... It's not worth the operational effort to deal with you every month.” – Jonah, [38:22]

9. Technology’s Role in Efficiency & Revenue

[40:00 – 42:48]

• Technology (like online leasing platforms and revenue management) makes operations scalable, attracts better tenants, and keeps costs down.
• “By creating things like requiring auto pay, like ID verification, like having a smartphone, you're automatically sort of ruling out people that you wouldn't have wanted as tenants anyway.” – Jonah, [41:11]

10. Revenue Management: Rate Increases, Communication, and Training

[44:30 – 55:54]

• Raising Rates: Key lever for revenue—needs to be staged (not all at once) and communicated with value.
• “Carrot and stick”: Give improvements (carrot) before raising rents (stick).
  • “If you're going to give them value, you want to make sure they at least are aware of that… before you go start doing things they're going to be upset about.” – Jonah, [52:15]
• Training managers to communicate rate increases and business rationale is crucial to avoid staff undermining ownership or creating PR headaches.

11. The Compounding Effect of Small Actions

[60:28 – 64:47]

• Small improvements to NOI (Net Operating Income) have massive impact due to cap rate leverage.
  • “You can add $50,000 of revenue but with... just ancillary income. ...That 50,000 at a 5 cap, I mean, holy cow... well over a million dollars.” – AJ, [60:50]
• Operational discipline, regular rent increases, and technology implementation build compounding value over years, not months.

Notable Quotes & Memorable Moments

• “I would rather have 20% occupancy and a million dollars in revenue than 100% occupancy and $500,000 in revenue.” – AJ, [12:28]
• “Your smaller units rent for much higher rates per square foot. ...But if you can't fill them up, you'd much rather have another unit that you can lease.” – Jonah, [10:14]
• “When we take over a facility, most of the time the tenants that are there are not our target tenants.” – AJ, [44:30]
• “We bought it ...and then we turned the 5 by 5s into 5 by 10s, 10 by 10s and immediately went up to 90 plus (occupancy).” – AJ, [19:38]
• “Manage your first tenants, not the other way around, don't let your tenants manage you.” – AJ, [58:03]
• “Be patient. It really does take a lot of time to retrain tenants.” – Jonah, [58:07]

Timestamps for Key Segments

• [00:00 – 05:43] – Why lower occupancy can drive higher revenue
• [06:18 – 10:14] – Understanding physical vs. economic occupancy
• [10:14 – 14:56] – Unit mix, market studies, and lender perceptions
• [16:37 – 20:43] – Avoiding unit-mix mistakes & conversion success stories
• [21:15 – 26:29] – Pricing by micro-market and external demand forces
• [28:05 – 30:30] – Reading demand signals & managing seasonality
• [32:25 – 36:16] – Calculating and maximizing customer lifetime value
• [37:01 – 42:41] – Curating the right tenant base through process
• [40:00 – 42:48] – Leveraging technology for tenant quality and efficiency
• [44:30 – 55:54] – Best practices for rent increases & staff/culture management
• [60:28 – 64:47] – The massive impact of small improvements (& final thoughts)

Conclusion

This episode delivers a masterclass in thinking beyond “occupancy at all costs.” Jonah Hall and AJ Osborne show that revenue (and thus long-term wealth) is a multi-variable equation: occupancy, pricing power, tenant quality, technology, and market knowledge. Owners who understand and work these levers—especially during downturns—unlock value overlooked by less sophisticated operators. For listeners just starting, patience and data-driven discipline are the watchwords; for the experienced, refining these strategies offers serious competitive advantage.

Find Jonah Hall: LinkedIn (search: Jonah Hall, Cedar Creek)
Find more episodes/video: Self Storage Income YouTube Series