After a record-setting year, the self storage sector is off to a strong start in 2022. Although street rates for storage properties are coming off record-high gains, demand remains healthy, signaling a good year for the industry. Street-rate rents dropped to 6.7 percent for the average 10×10 non-climate-controlled units, year-over-year in December, down 180 basis points from the previous month, while same-size climate-controlled units declined 80 basis points to 7.4 percent over the same time frame.
Overall, annual street rate performance was positive in all the top 30 markets tracked by Yardi Matrix, with rent growth at or above 5 percent in nearly all the markets. Meanwhile, on a month-over-month basis, national rates for 10×10 non-climate-controlled units declined by $1 to $127, and rates for the same-size climate-controlled units also fell $1, for the third consecutive month, to $145.
The ability to work from home and virtually from anywhere fueled migration and increased the need for self storage for home offices and gyms. Moreover, businesses are also increasingly turning to larger storage units for logistics and distribution purposes, ensuring healthy demand for the sector.
Rapidly expanding secondary markets in the South, Southwest and West benefit the most from these trends. Metros, such as Phoenix and Las Vegas, registered double-digit rent growth for the standard 10×10 climate- and non-climate-controlled units.
Nationally, projects under construction or in the planning stages accounted for 8.9 percent of existing inventory, up 10 basis points over the previous month. While the new-supply pipeline continued to increase on a national level, development activity remained flat or negative in more than half of the top markets.
New York is leading the nation in construction—the metro’s new-supply pipeline increased from 18.6 percent in November to 19 percent in December. Las Vegas had the second-largest pipeline with projects under construction or in the planning stages accounting for 15.6 percent of total stock, up 60 basis points over the previous month.