The first article in the Self Storage Basics series, written for people considering their first facility.
Patrick Wood, JBW Commercial | September 2, 2026
Why this series exists
Every week someone asks me a version of the same question: I have heard self storage is a good business, but how does it actually work? The people asking are not naive. They are dentists, contractors, retired executives, family offices and small developers with capital and good instincts, and they want a plain explanation before they call a broker or a lender. This series is that explanation. Each article covers one piece of the business a first-time owner or investor needs to understand, in Canadian terms, without assuming any background.
This first piece is the overview. The rest of the series goes deeper into terminology, rent rolls, valuation, development and financing.
The business in one paragraph
A self storage facility rents space to people and businesses on a month-to-month basis. The space is divided into units of different sizes, from lockers of 25 square feet to drive-up bays of 300 square feet or more, plus outdoor stalls for vehicles, boats and RVs. Tenants sign a short agreement, pay monthly, access their unit with a gate code or app, and leave when they no longer need it. The owner earns rent on hundreds of small tenancies rather than a handful of large ones. That is the entire model. Everything else is detail.
Where the revenue comes from
Unit rent is the core of the income, typically 85 to 90 per cent of it at a mature facility. Rates are quoted per unit per month, but operators think in terms of rent per square foot per year, because that is how you compare a 50 square foot locker with a 200 square foot drive-up bay. Climate controlled units command a premium over standard units, and indoor multi-storey facilities in urban markets earn far more per square foot than single-storey drive-up facilities in small towns, because the cost of land and construction is higher and so is the tenant’s willingness to pay.
The remaining revenue is ancillary. Tenant insurance or a protection plan is the largest piece and the highest margin: the facility offers coverage on the tenant’s contents and keeps a share of the premium. Administrative fees on move-in, late fees, retail sales of boxes and locks, and vehicle or trailer parking round it out. Parking is worth a note of its own. Stalls are counted as units and as income, but they are not counted in rentable storage square footage when a facility is valued, and stall counts flex as operators add or remove them, so they are best tracked as stalls rented rather than as an occupancy percentage.
What it costs to run
Storage is a low-expense business compared with most real estate. A well-run facility spends roughly 30 to 40 per cent of its revenue on operations, with the balance falling to net operating income. The main line items are property tax, staffing, insurance, utilities, marketing, repairs and maintenance, software and management fees.
Property tax deserves attention in Canada. Assessment authorities in some provinces value storage on the income approach, and rising rents can lead to rising assessments a year or two later. Insurance costs have climbed across the country since 2022. Staffing depends on the operating model: a single onsite manager, a remote call centre with automated gates, or a hybrid. Each is covered later in the series, but the point for now is that the choice shapes both the expense line and the tenant experience.
Why tenants stay longer than you expect
Month-to-month tenancy sounds like a weakness. In practice it is one of the sector’s strengths. The average tenant at a Canadian facility stays well over a year, and a meaningful share stay for several years. Moving out of a unit is a chore, the monthly amount is small relative to the hassle, and the reasons people rent (a move, a renovation, a divorce, a death in the family, a business that has outgrown its garage) rarely resolve on a schedule.
That stickiness lets operators raise rates on existing tenants, usually annually, without losing many of them. Revenue management, which means charging new tenants a street rate and then stepping existing tenants up over time, is now standard practice among larger operators and is the main lever that has driven income growth in the sector over the past decade. It is also the reason the gap between a facility run by a professional operator and one run by an absentee owner can be so wide.
Who rents storage
Demand comes from three broad groups. Residential tenants are the majority: people between homes, downsizing, renovating, storing seasonal equipment, or living in apartments that were never built with storage in mind. Commercial tenants are a growing and valuable segment: contractors, e-commerce sellers, pharmaceutical reps, sales teams and small businesses that need inventory space without a lease on an industrial bay. Vehicle and RV storage is the third, and it matters most in suburban and rural markets where lots are large and strata or municipal rules restrict parking at home.
The Canadian demand base has proven more durable than many investors expected. For four years the resale housing market has run below its long-run pace, yet storage revenue has kept growing, because the demand today rests on density, small business and life events rather than on home sales alone. That story is covered in The Missing Mover.
Why the sector holds up through cycles
Storage has three structural advantages over other property types. First, the tenant base is diversified. A 500-unit facility losing ten tenants in a month has a two per cent problem; an industrial building losing its one tenant has a hundred per cent problem. Second, the lease term is short, which means rent adjusts to inflation within months rather than at a five-year renewal. Third, the capital cost of keeping the building competitive is modest. There are no tenant improvements, no leasing commissions on every deal, and no elaborate common areas to refresh.
The trade-off is that storage is an operating business, not a passive one. Occupancy, pricing, marketing and collections have to be managed every month. Owners who treat a facility like a triple-net lease tend to underperform, and buyers who understand this are the ones paying real prices for underperforming facilities today.
The Canadian market in brief
Canada has considerably less storage per person than the United States, roughly a third as much by most estimates, and much of what exists was built by independent owners over the past 30 years. Ownership is still fragmented. The largest operator, StorageVault Canada, and a small group of institutional and US-based platforms own a minority of facilities, with the balance held by hundreds of private owners, many of whom hold a single property. Institutional capital has moved decisively into the market over the past two years, including Public Storage’s $1.67 billion entry, and that consolidation is the defining trend of the current cycle. A later article in this series covers the market structure in detail; the Q2 2026 Investor Update gives the current picture.
For a new investor the practical implication is simple. Supply is constrained by land cost and municipal reluctance, demand is growing with population and density, and the ownership base is older and fragmented. That combination is why professional buyers have been paying up for facilities and why the sector attracts new entrants.
What this means for a first-time owner
If you are considering your first facility, three ideas from this overview are worth holding onto. Income comes from many small tenancies that are surprisingly durable, which makes revenue stable but requires active management. Expenses are low, but property tax and insurance are the lines that move. And value is created by operating well, not just by owning the real estate.
The next article in the series covers the terminology you will hear from brokers, lenders and operators, so that when someone quotes you a rate per square foot or an economic occupancy figure, you know exactly what they mean.
This article is general educational commentary and is not investment, legal, accounting or tax advice. Patrick Wood is a commercial real estate professional and not a financial advisor. Readers should obtain independent advice before acting on any information here.
5 comments