Self Storage Off to a Strong Start
- Feb 16, 2021
Thanks to positive fundamentals, 2021 is off to a good start for the self storage sector. Street-rate rents rose 3.5 percent for the average 10×10 non-climate-controlled and 2.3 percent for the climate-controlled units of similar size, year-over-year as of January. Overall, annual street rate performance was positive in about 87 percent of the top markets tracked by Yardi Matrix for the standard 10×10 non-climate-controlled units, whereas month-over-month rent rates remained unchanged for both climate- and non-climate-controlled units.
California metros took the lead in rent growth, with some markets experiencing almost double-digit year-over-year growth for climate-controlled units. Over the past 12 months, street-rate rents for the standard 10×10 climate-controlled units increased 9.7 percent in the Inland Empire, 9 percent in San Jose and 8 percent on the San Francisco Peninsula and the East Bay.
Despite being historically undersupplied, with only 4.6 net rentable square feet storage space available per capita, Boston is showing signs of decelerating self storage momentum. Although the metro saw a 2.1 percent rent improvement on an annual basis, month-over-month rates declined 2 percent for the average 10×10 non-climate-controlled units. Development activity also remained flat in Boston, with projects under construction and in the planning stages representing 9.6 percent of total inventory. Throughout 2020, developers abandoned a total of 15 projects in the metro, more than in any other market.
Nationwide, projects under construction or in the planning stages accounted for 8.3 percent of existing stock, a slight 10-basis-point increase month-over-month. According to the latest forecasts, the new-supply pipeline is expected to shrink, compared to pre-COVID-19 projections. Despite an already substantial development pipeline and recent changes made to the city’s Industrial and Commercial Abatement program, which resulted in storage facilities not being eligible for tax abatement, New York’s pipeline saw a 40-basis-point uptick month-over-month, to 18.1 percent.