Top 5 Sun Belt Markets for Self Storage Transactions

Sales volume in the region has jumped more than 40 percent this year, Yardi Matrix data shows.

With the health crisis driving the popularity of lower-cost and less-dense metros, the Sun Belt region has continued to attract businesses and residents over the past year. Heavy population gains have, in turn, boosted the self storage market across the region, driving investor interest in the asset class.

Year-to-date through May, transaction volume in the Sun Belt region amounted to more than $862 million, up 42.3 percent compared to the same period in 2020 when investment totaled $606 million.

The table below highlights the five Sun Belt self storage markets with the highest overall sales volume year-to-date through May, based on Yardi Matrix data. The metros on the list account for 46 percent of total investment in the region.

 

Rank Market Total Square Feet Sold Avg. Price per Square Foot Transaction Volume (MM)
1 Phoenix 1,077,458 $152.06 $163.8
2 Los Angeles 389,861 $243.52 $94.9
3 Southwest Florida Coast 800,970 $128.54 $75.8
4 Orlando 565,193 $108.99 $61.6
5 Tucson 485,427 $169.96 $60.3

Source: Yardi Matrix

5. Tucson, Ariz.

Tucson saw nearly $60.3 million in closed self storage deals year-to-date through May, significantly higher than the $8.2 million recorded during the same period in 2020. Investors traded five facilities encompassing 485,427 square feet. The average per-square-foot price, however, slid from $217 in 2020 to $170 in 2021.

Life Storage expanded its footprint in Tucson with the acquisition of two properties totaling 159,100 net rentable square feet. The Class A assets were part of a portfolio transaction incorporating a third facility located in Queen Creek near Phoenix. The three properties sold for a combined $67 million.

4. Orlando, Fla.

Due to uncertain market conditions, investors in Orlando were cautious in 2020, closing only $55.3 million in self storage deals throughout the year. Investment appetite has already increased significantly in 2021: A total of 565,193 square feet of storage space changed hands for nearly $62 million through May. The average sale price was $109 per square foot.

While Class A facilities were most popular with investors last year, six out of the seven properties that traded this year were Class B or Class C assets. Reliant Real Estate Management sold two facilities to Blackstone Group for $16.5 million.

Southwest Florida Coast. Image by DeAnn Kamp via Pixabay

3. Southwest Florida Coast

Self storage activity in the Southwest Florida Coast region has been boosted by relocations from major gateway cities over the past year. Transaction volume in the region amounted to nearly $76 million year-to-date through May, more than three times higher than the $24 million recorded during the same period in 2020. Overall, 11 properties were sold, totaling 800,970 square feet.

The largest investor in the market was Life Storage. The REIT invested in a six-property portfolio, featuring Class A and Class B assets in Sarasota and Venice. Public Storage also acquired a two-property portfolio for nearly $24 million.

2. Los Angeles

Investment stalled in Los Angeles at the onset of the pandemic, with only $5.8 million in self storage deals closed from January through May of 2020. However, as the sector showcased its resilience, buyers closed an additional $125 million in transactions in the third and fourth quarters.

As rental rates continued to improve in Los Angeles, investor interest remained strong in 2021. Some 389,000 square feet traded for nearly $95 million year-to-date through May. Public Storage expanded its footprint with the acquisition of two properties, totaling 108,200 rentable square feet. Baranof Holdings sold the facilities for close to $50 million.

Phoenix. Image by Evgeni Tcherkasski via Pixabay

1. Phoenix

Phoenix tops our list with some $164 million in self storage deals closed year-to-date through May. This is a significant uptick from the nearly $53 million traded during the same period last year and even exceeds the $138 million closed throughout 2020. This year, a total of 11 facilities have changed hands, encompassing more than 1 million square feet. The average per-square-foot price also increased from $103 in 2020 to $152 in 2021.

Investors have placed greater emphasis on higher-quality assets this year: Nine of the 11 transactions closed through May involved Class A facilities. In one of the market’s most notable deals, Barker Pacific Group purchased a three-property, Life Storage-managed portfolio for $39.6 million.