Self Storage Rents Decline, Demand Stays Strong
Despite moderating rent growth, street rates remained stable by historical standards.
Although self storage rents continued to decline for the third consecutive month in November, demand for storage remains strong, fueling a positive outlook for the sector in the near term. Street-rate rents dropped to 6.7 percent for the average 10×10 non-climate-controlled units, year-over-year in November, down almost 200 basis points from the previous month, while same-size climate-controlled units declined to 8.2 percent over the same time frame.
Despite moderating rent growth, street rates remained stable by historical standards and no metros in the top 30 markets tracked by Yardi Matrix recorded negative rate performance for the standard 10×10 non-climate- and climate-controlled units.
A total of 24 markets registered 5 percent or higher rent growth in the non-climate-controlled category and 22 markets experienced the same growth in the climate-controlled category. Rent growth dropped to 2 percent or less only in a few metros, including Minneapolis, San Francisco, Portland and Washington, D.C.
On a month-over-month basis, national street rates for 10×10 non-climate-controlled units fell $1 to $127 in November over the previous month, while for the similar-size climate-controlled units, rates declined $1 for the third straight month to $145. However, the slowdown of rate growth should not be a concern, as it is simply reflecting the traditional effects of seasonality. Demand for storage will likely be maintained by positive demographic and housing trends across the nation.
There were 2,943 self storage assets in various stages of development as of November. This included 719 properties under construction, 1,252 planned properties, and 476 prospective projects. The pipeline accounted for 8.8 percent of existing inventory, a 20-basis point increase over October numbers.
New York continued to lead the nation in development activity in November, with projects under construction or in the planning stages accounting for 18.7 percent of existing stock. There were 179 projects in various development phases, encompassing more than 13 million square feet of storage space.
Read the full Yardi Matrix report.