Top 5 Markets for Self Storage Deliveries
- Sep 09, 2021
More than 18 months into the pandemic, self storage fundamentals continue to be strong. Street rates are still rising across the country and developers continue to add new projects to the pipeline.
From January to July, developers completed 349 facilities encompassing more than 26.3 million rentable square feet nationwide, down 13.7 percent compared to the same interval in 2020, when 30.5 million square feet of storage space was delivered, according to Yardi Matrix data.
Nonetheless, thanks to the sector’s robust performance, self storage construction seems to be accelerating—as of July, projects under construction or in the planning stages accounted for 8.5 percent of existing inventory, up 20 basis points over the previous month.
The table below highlights the top five markets for self storage deliveries across the U.S., ranked by total square footage completed year-to-date through July.
|Rank||Market||Rentable Square Feet Delivered||Percentage of Stock|
|1||Dallas – Fort Worth||1,878,400||2.8%|
Source: Yardi Matrix
Atlanta’s economy, built on strong infrastructure, workforce expansion and small business development, proved resilient in the face of the health crisis. The increased migration to the Sun Belt region has also driven population growth, with Atlanta gaining more than 60,500 residents in 2020, according to preliminary data from the U.S. Census Bureau.
Strong in-migration, coupled with other pandemic-induced demand, created a favorable environment for the self storage sector. Despite being oversupplied, with 8.9 net square feet available per capita, Atlanta recorded strong annual rate performance in July, demonstrating the market’s strength. On a year-over-year basis, street rates were up 16 percent for the standard 10×10 non-climate-controlled units and 19 percent for climate-controlled units of similar size.
Thanks to the sector’s strong performance, developers also remained active in the metro. Year-to-date through July, more than 827,000 rentable square feet of storage space was delivered, representing 2.2 percent of Atlanta’s inventory. Nonetheless, new deliveries were slightly down compared to the same period in 2020, when some 846,000 square feet of storage space came online.
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As Miami’s per-person storage inventory hovered above the 6.8 net square feet national average in recent years, developers were cautious with adding new projects to the metro’s pipeline. However, thanks to continued in-migration and relocating businesses from the West and East Coasts, self storage has seen record demand since the onset of the pandemic.
Over the past few months, Miami led top markets in annual street rate performance for the standard 10×10 non-climate-controlled units. While in July the metro recorded the highest rent growth for both climate- and non-climate-controlled units, up 21 percent and 24 percent, respectively, year-over-year.
Year-to-date through July, developers completed 857,353 rentable square feet of storage space, accounting for 2.2 percent of Miami’s existing stock, down 32 percent compared to the same period in 2020, when more than 1.2 million square feet of storage space was delivered. The metro’s new-supply pipeline accounted for 11.2 percent of total inventory in July, up 20 basis points over the previous month.
3. Washington, D.C.
Self storage developers were busy in Washington, D.C., with 12 properties delivered year-to-date through July. The completed projects totaled 949,028 rentable square feet, accounting for 3.4 percent of the metro’s total inventory. Completions were up 43.1 percent compared to the same period in 2020, when around 663,000 square feet of storage space came online.
Despite steady completions, the metro only has 5.4 net square feet available per capita—below the 6.8 national figure—providing opportunities for further storage development. Thanks to pent-up demand and relatively low supply, Washington, D.C., experienced strong rent performance in recent months. On a year-over-year basis street rates were up 11 percent for the standard 10×10 non-climate-controlled and 15 percent for climate-controlled units of similar size.
2. New York
Year-to-date through July, developers completed more than 1.7 million rentable square feet of storage space, accounting for 2.5 percent of New York’s existing stock, up 8.1 percent compared to the same interval in 2020, when around 1.5 million square feet of storage space came online.
With only 3.6 net square feet available per person, developers continue to be bullish on self storage development in the metro. As of July, New York’s new-supply pipeline accounted for 18 percent of existing inventory, up 30 basis points over June.
Annual street rate performance in New York was also strong in July, increasing by 11 percent and 13 percent for the standard 10×10 climate- and non-climate-controlled units. Due to robust rent growth and long-term absorption potential, investors are also attracted to the market. In the first half of 2021, New York saw the highest influx of capital—more than 1.4 million square feet of storage space traded for around $261 million.
1. Dallas-Fort Worth
Dallas-Fort Worth’s self storage market has been benefiting from the metro’s substantial population growth. The metro has gained more than 1.3 million residents since the 2010 census, according to the 2020 U.S. Census Bureau estimates. Despite heavy deliveries and the broader economic challenges over the past few years, storage fundamentals remained strong in the Dallas-Ft. Worth metroplex.
Year-to-date through July, Dallas-Forth Worth added nearly 1.9 million square feet of storage space to its inventory, representing 2.8 percent of existing stock. New deliveries were up 39.9 percent compared to the same period in 2020 when approximately 1.3 million square feet of storage space came online.
In line with other metros on the list, the metroplex experienced double-digit rent growth for both the standard 10×10 climate- and non-climate-controlled units, up 12 percent and 11 percent, year-over-year in July.