Top 5 Markets for Self Storage Transactions
- Aug 06, 2021
Thanks to the self storage sector’s strong performance over the past year, investor interest in the asset class continues to rise. Nationwide, nearly 30 million square feet of storage space traded year-to-date through June for a combined $2.5 billion, according to Yardi Matrix data. This marks an 88 percent increase compared to the same period in 2020 when the total sales volume amounted to $1.4 billion.
The table below highlights the top five self storage markets with the highest overall transaction volume year-to-date through June, drawing on Yardi Matrix data. The metros on the list account for more than a quarter of total investment activity—all top five markets reported a considerable increase in volume this year compared to 2020.
|Rank||Market||Total Square Feet Sold||Avg. Price per Square Foot||Transaction Volume (MM)|
Source: Yardi Matrix
Transaction volume in Miami amounted to nearly $106 million year-to-date through June. Although sales activity was significantly higher than the roughly $38 million closed during the same time frame last year, investor appetite has not recovered to pre-pandemic levels yet. During the first half of 2019, 19 facilities changed hands for $387 million, 72.7 percent higher than the transaction volume recorded this year.
Overall, seven properties were sold during the first half of 2021, encompassing a total of 769,829 square feet of storage space. The largest buyer in the metro was Tarco Properties—the firm paid more than $35 million for two facilities totaling 258,318 square feet. The company owns more than 1.8 million square feet of storage space in Miami.
Investment stalled in Chicago at the onset of the pandemic, with little more than $5 million in self storage deals closed from January through June of 2020. As some of the uncertainty dissipated, investors closed an additional $75 million in the third and fourth quarters.
As self storage fundamentals continued to improve in Chicago, investor interest accelerated in 2021. Nearly 1.7 million square feet of storage space traded for more than $135 million year-to-date through June. A total of 15 properties were sold for an average of $81.7 per square foot, up from $75.8 in the previous year.
3. Washington, D.C.
Some 729,000 square feet of storage space changed hands in Washington, D.C. for nearly $169 million year-to-date through June. Investment this year was substantially higher than the $46 million recorded during the same period in 2020. During the first half of this year, eight properties traded for an average of $231.2 per square foot, up 30.8 percent from the $176.8 registered last year.
Public Storage has expanded its Washington D.C. footprint with the acquisition of a three-property portfolio encompassing 330,905 square feet, valued at nearly $131 million. The properties are part of Public Storage’s $1.8 billion acquisition of ezStorage, a 48-property self storage portfolio located across Washington, D.C., Virginia and Maryland.
Phoenix saw nearly $202 million in closed self storage deals year-to-date through June. This is a considerable uptick from the roughly $53 million traded during the same period last year and even exceeds the $138 million closed throughout 2020. So far, 14 facilities comprising more than 1.3 million square feet of storage space changed hands for an average of $151.2 per square foot, significantly above the $103.9 and $96.7 price per square foot recorded during the same time frame in 2020 and 2019.
The biggest buyer in the metro was Barker Pacific Group—the firm purchased a three-property portfolio totaling 296,988 square feet for $40 million from Titan Development. Hartford Financial Services Group provided $25.1 million in financing for the acquisition of the properties.
1. New York
New York tops our list with around $261 million in self storage deals completed from January through June this year. That is almost double the $139 million traded during the same period in 2020, and 7.5 percent higher than the $243 million recorded before the pandemic in 2019. A total of 19 facilities were sold in the first half of the year, comprising more than 1.4 million square feet. The average per-square-foot price also increased from $183.2 last year to $254.7 in 2021.
The largest influx of capital was recorded in Queens, with more than $126 million in self storage assets changing hands. The most notable deal was completed by CubeSmart—the REIT paid $90 million for a 155,853-square-foot property.