Top 5 Markets for Self Storage Development

Thanks to heightened demand for storage space during the pandemic, the self storage sector recorded unprecedented rent growth and occupancy gains, fueling developers’ appetite for the asset type. As of March, there was more than 147 million square feet of storage space under construction or in the planning stages, accounting for 9.3 percent of existing stock, up 20 basis points over the previous month.

The migration toward low-cost, less dense metros has unlocked significant growth opportunities in secondary and tertiary markets throughout the country. While some major markets, such as New York, Las Vegas and Philadelphia, had a significant pipeline—in the 15 percent and 19 percent range, the next-tier markets on the list below had a higher construction activity relative to their existing stock.

The table below highlights the top five self storage markets for underway and planned projects as a percentage of total stock, using Yardi Matrix data.

Source: Yardi Matrix

5. Lafayette, Ind.

Thanks to economic growth driven by activity associated with Purdue University, the Lafayette metropolitan area has been steadily growing over the years. Between 2010 and 2020, the metro has expanded by 24,500 residents, or 12.2 percent, according to the Indiana Business Review. While the pandemic slowed down economic expansion across the metro, population growth remained solid underscoring demand for housing and self storage.

Following a decade of slow development, with merely 309,241 square feet delivered between 2010 and 2021, Lafayette had some 204,000 square feet of storage space under construction or in the planning stages as of March, accounting for 19.5 percent of the metro’s total stock. With an inventory of roughly 1 million square feet, Lafayette has 6.4 net square feet of storage space available per person, below the 7.1 national average.

4. Tallahassee, Fla.

Image by Self Storage via Wikimedia Commons

Florida has become a favorable destination for relocating residents during the pandemic. The state gained around 211,000 residents from July 2020 to July 2021, according to U.S. Census data, the Orlando Sentinel reported. With the heightened migration, Tallahassee has also become a more popular destination for residents, driving up real estate activity across the city and Leon County.

Self storage developers have taken note of the area’s growth, with a steady uptick in development activity over the past few years. As of March, the city had a total of 563,280 rentable square feet of storage space under construction or in the planning stages, accounting for 20.3 percent of existing stock. The projects are clustered in northeast Tallahassee, along the Capital Circle beltway.

3. Providence, R.I.

Despite a decade of very limited deliveries, Providence has been steadily expanding over the past couple of years. Since the onset of the pandemic, the city’s inventory has grown by more than 1.1 million square feet. As of March, the metro had nearly 1.5 million rentable square feet of self storage space under construction or in the planning stages, representing 22.5 percent of existing stock.

Providence has a completed inventory of more than 6.4 million rentable square feet and only 5.1 net square feet available per capita. Low inventory and strong rent growth (up 4.7 percent year-over-year in March) will likely drive development activity in the near future.

2. Allentown – Bethlehem, Pa.

Although construction activity has been moderate in Allentown – Bethlehem in the years leading up to the health crisis, the metro’s self storage market was able to benefit from the pandemic-driven demand. On par with national trends, the market registered record-breaking rent growth throughout the pandemic, supporting developers’ appetite for new self storage products.

As of March, the metro had 840,562 rentable square feet of storage space in the pipeline, accounting for 23.6 percent of the market’s existing inventory. There was some 414,000 rentable square feet of storage space under construction and approximately 700,000 rentable square feet in the planning stages. With merely 4.8 net square feet available per person, below the 7.1 national average, the metro has room for future developments.

1. Worcester – Springfield, Mass.

Image by James Sullivan via Unsplash

When it comes to the share of space underway as a percentage of existing inventory, the Worcester – Springfield market ranked first, with eight projects under construction and 19 in the planning stages, totaling more than 1.7 million rentable square feet. The new-supply pipeline represented 28.7 percent of existing stock as of March. With a completed inventory of 6.1 million rentable square feet, the market has only 5 net square feet of storage space available per capita, below the national figure.

A cluster of projects in the planning stages is in Northern Springfield near Springfield College, while most projects already under construction are located closer to downtown Worcester. Amerco Real Estate has two U-Haul branded conversion projects underway, slated for completion this summer, and two other projects in the planning stages.