Top 5 Markets for Self Storage Deliveries in 2020
- Feb 04, 2021
Despite the initial sharp dip at the start of the health crisis, the self storage sector bounced back quickly, with continuously improving rent rates and heightened investor interest across the U.S. Development activity moderated slightly across the country in 2020, with some 60 million square feet of self storage space coming online nationwide, marking a 13 percent drop compared to 2019, when more than 69 million square feet of storage space was delivered, according to Yardi Matrix data. Nonetheless, the slowdown in development activity can be beneficial in the long term, by helping oversaturated markets restore the balance between supply and demand.
The table below highlights the top five markets for self storage deliveries across the U.S., ranked by total square footage completed in 2020.
|Rank||Market||Square Footage Deliveries (MM)||Percentage of Stock|
|3||Dallas – Ft Worth||2.1||3.0%|
Source: Yardi Matrix
Miami’s strong economic expansion and robust employment and population growth have underscored demand for self storage in recent years. Although the health crisis has disrupted the metro’s economy, the storage sector stayed resilient, with positive rent performance through most of the third and fourth quarters of 2020. As of December, year-over-year street rate rents were up 4 percent for both the standard 10×10 climate-controlled and non-climate-controlled units.
As construction sites remained open through the lockdown period, developers were able to forge ahead with self storage projects. In 2020, more than 1.9 million square feet of storage space was delivered, representing 4.3 percent of Miami’s existing inventory. Nonetheless, new deliveries were slightly down compared to 2019, when some 2.2 million square feet of storage space came online.
At the beginning of 2020, Miami’s planning board imposed a ban on new self storage developments near mixed-used residential areas and a general 270-day moratorium on any new storage development. The slowdown in development activity is expected to help the storage market restore the balance between supply and demand. Miami has around 7.9 net square feet of storage space available per capita, above the 6.7 national figure.
Over the past few years, demand for self storage in Seattle has been driven by substantial population and employment gains. Thanks to major tech companies, such as Facebook, Apple, Dropbox and Google, the metro has become a magnet for well-educated Millennials. In 2019, the city added 40,482 residents, increasing its population by 1 percent over the previous year, whereas the national rate stood at 0.3 percent. While the COVID-19 crisis has had a considerable impact on Seattle’s economy, the tech sector is expected to recover fast due to the high demand for cloud services, as employees continue to work remotely.
Self storage developers were busy in Seattle last year—more than 2 million square feet of storage space was completed, totaling 6.3 percent of the metro’s total inventory. Seattle-based Columbia Pacific Advisors expanded its footprint with nearly 380,000 square feet of storage space managed by CubeSmart, while The William Warren Group added three StorQuest-managed facilities to its portfolio, encompassing more than 280,000 square feet.
3. Dallas – Ft. Worth
After the storage development boom in 2018, most Texas markets have become considerably oversupplied. Due to the heavy new deliveries, Houston, Austin, San Antonio and Dallas-Fort Worth have limited their construction pipelines to help restore market equilibrium. Although the coronavirus outbreak has negatively impacted the overall economy, for major Texas self storage markets it might have generated some positive results, by forcing a slowdown in stock expansion.
In 2020, developers delivered 2.1 million square feet of storage space, accounting for 3.0 percent of Dallas-Fort Worth’s existing stock, down 30 percent compared to 2019, when a total of 3 million square feet of storage space came online. The metro still has around 10.7 net square feet available per person, however, thanks to the pent-up demand driven by the pandemic, annual street rate performance was positive in December 2020, increasing by 1 percent for both climate- and non-climate-controlled units.
Thanks to its healthy market fundamentals prior to the pandemic, Phoenix was better able to withstand the impacts of the economic fallout. Although the self storage market felt the initial impact, Phoenix was able to recover, with annual street rates increasing by 5 percent and 4 percent, respectively, for the average 10×10 non-climate and climate-controlled units, as of December 2020.
Last year 22 facilities were delivered, totaling 2.3 million square feet of storage space, or 6.6 percent of Phoenix’s total stock. The metro recorded a cycle peak in 2019 when more than 2.7 million square feet of storage space came online, almost double 2018’s 1.4 million square feet.
A bulk of newly completed projects is located near the Phoenix Sky Harbor International Airport and Arizona State University, including a 75,329-net-rentable-square-foot Public Storage-managed facility owned by Rincon Partners. Public Storage also added two properties to its owner portfolio, encompassing around 282,000 square feet.
1. New York
New York has felt the effects of the economic fallout, however, thanks to its countercyclical nature, the self storage market fared well. Annual street rate performance was positive for both climate- and non-climate-controlled units, up 3 percent and 4 percent, respectively, as of December. The metro also saw substantial investor interest in the second half of 2020, including CubeSmart’s $540 million acquisition of an eight-property portfolio from Storage Deluxe.
New York tops our list, with more than 4 million square feet of self storage deliveries in 2020, representing 5 percent of total inventory. Despite having the largest self storage inventory nationwide—more than 84 million square feet—the metro has only 4.3 net square feet of storage space available per capita.