Self Storage Rents Remain Slow but Solid
Rent gains will remain modest compared to last year, but seasonal growth is expected to return in the coming months.
Although self storage fundamentals will remain healthy, the sector is expected to return to more normal seasonal growth, since increases won’t be able to match the record gains seen in 2021. Street rates for 10×10 non-climate-controlled units dropped 180 basis points to 5.8 percent from February to March, while rates for same-size climate-controlled units fell 80 basis points to 6.6 percent over the same time frame.
Slowing rent growth is more apparent in coastal gateway metros, while markets in the South, Southeast and Southwest continue to showcase record performance. Miami posted the strongest gains on a year-over-year basis, with rates for 10×10 non-climate-controlled units increasing by 16.7 percent. Atlanta and Phoenix followed with a 15 percent and 12.5 percent growth for the same unit type.
While street rates remained mostly unchanged on a month-over-month basis across the nation, some metros experienced more substantial movement. Markets such as Denver, Washington, D.C., and Boston saw street rates for the average 10×10 climate- and non-climate-controlled units rise a combined $2. After the peak last summer, rent growth was sluggish in all three markets, and this hike might indicate seasonal patterns.
Overall, combined street rates climbed by $1 in eight of the top 31 metros tracked by Yardi Matrix. However, rates remained level in 17 metros. Meanwhile, Austin, Philadelphia and Las Vegas saw combined street rates decrease by $1 month-over-month in March. Nonetheless, it is still rather early to tell if this indicates a long-term trend in the markets.
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The existing net square feet per capita and new-supply pipeline seem to have little to no impact on rent growth across the nation. The top-performing metros have a stock greater than the national average of 7.1 net rentable square feet per person.
There were 3,992 self storage assets in various stages of development as of March. This included 726 properties under construction, 1,410 planned properties and 554 prospective projects. Nationally, projects under construction and in the planning stages accounted for 9.3 percent of existing inventory, up 20 basis points over February.
Columbus, Ohio, registered the largest uptick in development activity month-over-month. Projects under construction or in the planning stages increased 160 basis points, accounting for 9.9 percent of the metro’s existing inventory. On the other end of the spectrum, Boston saw its development pipeline decrease 10 basis points, equal to 9.9 percent of total stock.
Head over to Yardi Matrix to read the full report.