The Hidden Value in Underperforming Storage Facilities

At first glance, an underperforming storage facility may look like a struggling business—low occupancy, outdated systems, and declining revenue. However, for seasoned operators and investors, these facilities often represent hidden gems. Beneath the surface inefficiencies, there is frequently untapped potential that, once unlocked, can transform an underperforming property into a profitable and high-value asset. In this article, we’ll explore why underperforming storage facilities hold hidden value and how strategic improvements can drive NOI growth and long-term success.

Why Storage Facilities Struggle

Before uncovering hidden value, it’s important to understand why some facilities underperform. Common issues include:

• Lack of Professional Management: Many facilities are family-run or owner-managed without systems to maximize revenue and efficiency.
• Poor Marketing: Without an online presence, facilities fail to capture today’s digital-first customers.
• Inconsistent Pricing: Rates that are too low or not adjusted for demand result in missed revenue opportunities.
• Deferred Maintenance: Outdated signage, unkept grounds, and aging units discourage tenants and lower occupancy.
• Operational Inefficiencies: Manual processes and inconsistent collections lead to lost income.

On the surface, these problems seem like liabilities. But to experienced operators, they are signs of opportunity.

Uncovering the Hidden Value

Underperforming storage facilities can be repositioned with the right management approach. The hidden value comes from identifying what’s holding the property back and implementing strategies to unlock its true potential. Here are several ways professional management transforms struggling facilities:

1. Occupancy Growth

One of the most obvious opportunities lies in increasing occupancy. Facilities running at 50–60% occupancy may look unattractive to some, but professional operators see the opportunity to raise those numbers with targeted marketing, dynamic pricing, and streamlined operations. Even modest increases in occupancy can significantly boost NOI and overall valuation.

2. Pricing Optimization

Many underperforming facilities haven’t updated their pricing structure in years. Professional management uses data to adjust rates based on unit size, local demand, and seasonal trends. Small, strategic rent increases spread across hundreds of units can result in substantial NOI growth without major capital expenses.

3. Expense Management

Operating expenses are another area where underperforming facilities bleed value. Vendor contracts may be outdated, staffing inefficient, or utilities unmanaged. Professional operators renegotiate contracts, implement technology to reduce staffing costs, and introduce energy-efficient upgrades. Lowering expenses without compromising service directly impacts NOI.

4. Technology Integration

Facilities that still rely on paper ledgers or manual gate logs are behind the curve. Introducing online rental portals, automated billing, and smart access systems not only improves the customer experience but also reduces administrative costs. Modern tenants expect convenience, and facilities that deliver it stand out in competitive markets.

5. Curb Appeal and Maintenance

First impressions matter. A fresh coat of paint, improved lighting, updated signage, and well-maintained grounds can quickly change the perception of a facility. These relatively low-cost improvements help attract new tenants and instill pride in existing ones, improving retention and stabilizing revenue.

How NOI Growth Translates to Value

Improving NOI is the ultimate goal because it directly increases the value of a property. Commercial real estate is typically valued based on income performance. For example, if a facility increases its NOI by $50,000 annually and capitalization rates in the area are 7%, that single improvement translates into over $700,000 in added value. What looks like a struggling property on paper can quickly become a million-dollar turnaround with the right systems in place.

Case Example: Turning a Struggling Facility Around

Consider a 200-unit storage facility operating at 55% occupancy, with outdated signage and no online presence. The property is generating limited revenue, and the owner is considering selling. A professional operator acquires the facility and implements the following changes:

• Launches a digital marketing campaign and improves local SEO
• Updates signage, lighting, and landscaping for stronger curb appeal
• Introduces online rentals and automated payment systems
• Optimizes pricing by adjusting rates based on demand and unit size
• Negotiates new vendor contracts to lower recurring expenses

Within 18 months, occupancy increases to 88%, NOI grows by 40%, and the property’s valuation jumps significantly. What was once an underperforming asset becomes a profitable, high-demand facility.

Why Investors Seek Out Underperforming Facilities

Many investors actively look for underperforming storage facilities because they offer predictable upside. Unlike stabilized assets that trade at premium prices, underperforming properties can often be acquired at a discount. With proven management strategies, investors can unlock value, generate strong returns, and create long-term stability. It’s a classic “buy low, improve, and hold or sell” model that has been successful across the storage industry.

Final Thoughts

Underperforming storage facilities may not look appealing at first glance, but to the right operator, they hold hidden value waiting to be unlocked. With occupancy improvements, pricing optimization, expense control, and modern technology, these properties can quickly turn into profitable, high-value assets. For owners, this means there may be more potential in your property than you realize. For investors, it represents a powerful opportunity to transform inefficiencies into returns.

At Great Lakes Land Holdings, we specialize in acquiring and repositioning underperforming storage assets. Our proven systems uncover hidden value and create long-term success for both owners and investors. If you’re ready to explore how much value your facility may be hiding, connect with our acquisitions team today.