Self Storage Rents Continue to Slow Down
Year-over-year rent growth was slowest since mid-2020.
Seasonality is kicking in for the self storage sector, with the recent trend of lowering rates month-over-month continuing in September. The third quarter closed with the average national street rates contracting another 70 basis points, down 1.4 percent. The national average declined $2 on a monthly basis, reaching $138 for standard-sized 10×10 units. Among the top 31 markets tracked by Yardi Matrix, these rates held steady for just three metros—Los Angeles, Pittsburgh and Portland—while Miami saw the largest slump, falling $5 compared to the August figure.
Contrastingly, year-over-year changes are relatively limited—the slowest rate of street rate growth since July 2020—but encouraging, the overall average encompassing all unit types and sizes marked a 70-basis-point increase year-over-year. Taking a closer look, yearly changes for the 10×10 climate-controlled units stagnated, while national street rates for the similar-sized non-climate-controlled units reached $148, representing an 80-basis-point growth compared to 2021. Overall, amidst the general slowdown, regarding the 10×10 non-climate-controlled units three metros had street rate gains exceeding 5 percent, while three times as many metros registered rate decreases. For the similar-sized climate-controlled units no metro tracked by Yardi Matrix saw a 5 percent or more growth instead, 13 metros saw an annual downturn in September.
As of September, Orlando had the strongest annual gains for the 10×10 climate-controlled units at 4.2 percent, while Raleigh-Durham was leading the markets for the similar-sized climate-controlled units and Pittsburgh rounded out the list with the largest year-over-year negative rate growth for both unit types.
There were 4,306 self storage properties in various stages of development. This figure encompassed 769 projects under construction, 1,649 in the planned stages as well as 548 prospective properties. As of September, only the Las Vegas market had a decrease in development activity, while the national development pipeline expanded by 20 basis points month-over-month and accounted for 10.6 percent of the overall stock.
At the end of the third quarter, Philadelphia led the nation in terms of self storage pipeline size relative to total stock, with projects underway or in the planning stages accounting for 21.2 percent of existing inventory. Looking at month-over-month growth, Boston had the largest uptick as the market’s pipeline increased 70 basis points, followed by New York, Atlanta, Miami and Dallas-Fort Worth with a 50-basis-point growth in each.
Head over to Yardi Matrix to read the full report.