Top 5 Markets for Self Storage Deliveries
- Mar 31, 2021
While most commercial real estate sectors continue to face economic challenges in 2021, the self storage industry appears to maintain its strong recession-resistant nature. The year-over-year national street rate performance was positive for both climate- and non-climate-controlled units for the fifth month in a row in February. Heightened demand for storage space and a gradual slowdown in development activity across the country will likely continue to put upward pressure on rental rates.
Storage completions moderated in February, with some 3.9 million square feet of space coming online nationwide, marking an 18 percent drop compared to February 2020 when more than 4.8 million square feet of storage space was delivered, according to Yardi Matrix data. February completions account for 0.3 percent of the country’s nearly 1.5 billion-square-foot self storage stock.
The table below highlights the top five markets for self storage deliveries across the U.S., ranked by the share of space completed as a percentage of existing inventory.
|Rank||Metro||Square Feet Delivered||Percentage of Stock|
|4||Worcester – Springfield||81,950||1.3%|
Source: Yardi Matrix
5. Wichita, Kan.
Wichita has been steadily expanding in the past decade, with its population increasing by 2.6 percent since the 2010 census, according to July 2019 estimates. Before the COVID-19 crisis, Wichita was enjoying strong employment growth, however, its heavy reliance on the aviation and manufacturing industries led to considerable job loss, putting economic expansion on hold.
Self storage development has gradually accelerated in the past five years in Wichita, with the metro recording a cycle peak in 2020 when five properties were delivered encompassing a total of 508,952 square feet. Last month, Wichita added 54,200 square feet of storage space to its inventory, representing 1.2 percent of the metro’s more than 4.4 million-square-foot existing stock. Completions in 2021, however, will likely lose steam, as no projects were in the planning or in the construction phases as of February, according to Yardi Matrix data.
4. Worcester-Springfield, Mass.
The Worcester-Springfield market has attracted a high number of developers in the past couple of years, as nearby high barrier-to-entry markets such as Boston have become increasingly competitive and provide limited opportunities for new development.
In February, developers completed one storage facility in Worcester-Springfield, encompassing 81,950 square feet. The new property accounts for 1.3 percent of the metro’s 6.4 million-square-foot inventory. The Worcester-Springfield market has 10 properties in the planning stages and eight under construction, totaling more than 1.3 million square feet. All underway projects are expected to deliver this year.
3. Pensacola, Fla.
Pensacola’s self storage market has been benefiting from the metro’s substantial population growth. The metro has gained more than 53,600 residents since the 2010 census, according to July 2019 estimates. Pensacola’s self storage inventory has been gradually expanding since 2016—last year, it reached a new cycle peak in deliveries, with a total of 435,971 storage space completed.
Last month, developers added two facilities comprising 143,582 square feet to stock. The new completions represent a total of 1.5 percent of Pensacola’s more than 9.8 million-square-foot inventory. Despite economic uncertainties, the new-supply pipeline remains elevated in the metro, with 14 projects under construction or in the planning stages, totaling more than 960,000 square feet of storage space.
2. Knoxville, Tenn.
As one of the top emerging multifamily markets, Knoxville provides a great opportunity for self storage development. The metro’s population increased 6.6 percent between the 2010 census and July 2019, attracting residents from smaller cities in Tennessee. Thanks to its healthy pre-pandemic economy and highly skilled workforce, the metro is well-equipped to overcome the economic downturn.
In line with other metros on the list, Knoxville’s self storage inventory grew significantly over the past decade and reached a cycle high last year when a total of eight projects were delivered, encompassing nearly 600,000 square feet. In February, 93,600 square feet of storage space was completed, representing 1.7 percent of Knoxville’s more than 5.6 million-square-foot stock.
1. Des Moines, Iowa
When it comes to the share of space delivered as a percentage of existing inventory, Des Moines ranked first, with 107,190 square feet of completed storage space, representing 2.7 percent of the metro’s 4.1 million-square-foot stock.
Thanks to substantial population growth over the past decade—up 15.3 percent since the 2010 census in July 2019—Des Moines has more room for self storage development in the future. The metro has seven projects in the pipeline, encompassing more than 630,000 square feet. Four of these projects are under construction and slated for completion in the second quarter of 2021.