Self Storage Street Rates Slowdown Softens

Annually Nashville was the sole market where rates increased for both 10x10 unit options.

January 2023 Year-over-Year Rent Change for 10×10 Units. Image courtesy of Yardi Matrix

The overall picture for the self storage sector remains favorable, although rent rates and existing supply have continued to temper what has been strong growth in the industry. In January, the average national street rate for all unit sizes decreased by 2.8 percent year-over-year, just as it did in December.

Taking a closer look, rates for standard-size 10×10 units dipped 4.1 percent for climate-controlled units, declining to $141, while rates for the same-sized non-climate-controlled units fell to $126, showing a 2.3 percent annual drop. While rates continued to soften the January rates for 10×10 non-climate-controlled units represented only a $7 decline compared to their record peak in the past summer and the 10×10 climate-controlled units showed an $11 decline from their summer 2022 peak value.

Among the top 31 markets tracked by Yardi Matrix, Nashville remained the sole market that registered a positive (2.9 percent) annual street rate growth for the 10×10 climate-controlled units in January, while at the same time, the same-sized non-climate-controlled units also showed a nearly 1 percent year-over-year increase. Additionally, for the 10×10 non-climate-controlled units four other metros saw positive annual rent expansion, with Raleigh-Durham leading, at 3.1 percent.

Focusing on monthly changes, the trend of decelerating street rents softened, as in January the national rates for the 10×10 non-climate-controlled and climate-controlled units combined remained flat, stagnating at $132. Overall, the January decline was not as widespread as the previous month, since only 14 of the top 31 metros witnessed a dip, whereas rates held steady in 13. Meanwhile, Washington, D.C., Boston, San Jose and New York realized a modest $1 growth month-over-month and on the other end of the spectrum Seattle saw the most significant decline at a $2 fall compared to the December value.

Self storage development stock

Self storage units. Image by luismmolina/iStockphoto.com

In the first month of the year, the national pipeline encompassed 4,626 self storage properties in various stages of development. Further breaking down incoming inventory, there were 827 projects underway, 1,783 self storages in the planning stages and 646 prospective properties. The properties under construction accounted for 3.7 percent of the total national inventory, 10 basis points higher than the December national share.

New York was ahead of all other metros in terms of relative stock, although the metro didn’t register any month-over-month changes in its under-construction pipeline, which accounted for 7.2 percent of existing self storage inventory. The New York market has room to expand its 74.7 million-square-foot self storage footprint amounting to 3.6 net square feet available per person, well below the 7.1 national average. Orlando and Philadelphia round out the top three largest new supply pipelines under construction, accounting for 6.9 and 6.7 percent of existing inventory, respectively.

Head over to Yardi Matrix to read the full report.

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