Top Markets for Self Storage Construction (Oct. 2022)

The nationwide self storage pipeline continued to grow in October, with 801 projects under construction totaling more than 57.5 million square feet. Another 121.4 million square feet of storage space was in planning stages. Last year, nearly 46 million square feet of self storage space was delivered, with completions waning in 2022, as only 30.1 million square feet of space came online as of October.

The table below highlights the top five self storage markets for construction activity, based on the square footage of underway projects, using Yardi Matrix data. Combined, as of October, 185 self storage properties were under construction in these markets, accounting for slightly more than 23 percent of nationwide projects underway.

Source: Yardi Matrix

1.      New York

When looking at New York City’s development landscape, construction activity for all sectors is back to pre-pandemic levels, according to a recent report by the New York Building Congress, with construction spending expected to reach $86 billion in 2022.

Drilling down to the self storage sector, the market ranks first when it comes to square feet of space underway. As of October, New York had 69 projects under construction amounting to 5.3 million square feet. Despite having the second largest completed inventory—74.3 million rentable square feet—the market has only 2.47 net square feet of storage space available per capita, well below the national figure, as well as being lower than the other markets on our list.

The New York pipeline also includes 128 planned properties totaling 9.1 million square feet, combined the projects in the under-construction and planning stages account for 19.4 percent of existing stock. Completions are set to overtake 2021 figures, as last year the metro expanded by 32 properties totaling 2.6 million square feet. The 31 projects that were delivered this year through already amounted to 2.6 million square feet.

2.      Dallas-Fort Worth

The Metroplex is expected to close this year as the nation’s fifth-fastest-growing metro by a 3.1 percent projected GDP growth for 2022, according to The Dallas Morning News. Economic growth, coupled with a solid population increase and business friendly environment only fuel further demand for housing and self storage space.

The Dallas-Fort Worth market had 3.8 million square feet of self storage space under construction across 44 projects, rounded out by 54 developments in the planning stages, encompassing 3.6 million square feet of storage space. The new-supply pipeline represented slightly over 10 percent of existing inventory as of October.

The market has the largest self storage footprint, amounting to 74.5 million square feet, or 8.89 net square feet available per person, above the 8.33 national average. Overall, deliveries decreased with merely 667,336 square feet of projects completed as of October, a downshift compared to 2021, when the self storage inventory expanded by 2.4 million square feet.

3.      Los Angeles

As seasonality is kicking in for the sector, Los Angeles was among the only three metros where rates for the standard-sized 10×10 units saw no change month-over-month as of September. The following month, the market had 27 self storage projects under construction, totaling 2.3 million square feet. L.A. had nearly twice as many properties in the planning stages, accounting for 4.9 million square feet to the pipeline. In total, the rentable square feet of storage space under construction, along with those in the planning stages, represented approximately 10.2 percent of the market’s existing self storage inventory.

In 2021, ten properties encompassing 1.1 million square feet came online, while 2022 is catching up, with roughly 964,000 square feet of storage space across 11 self storage assets completed as of October. With only 4.25 net square feet available per capita, there is room for future developments adding to the metro’s 70.6 million square-foot footprint.

4.      Phoenix

As the highest-ranking western market by multifamily investment volume continues to display strong fundamentals, developers across the commercial real estate sectors continued to favor Phoenix. As of October, the market had a self storage pipeline accounting for 14.6 percent of existing stock. Taking a closer look, the new-development pipeline breaks down to 23 projects underway, totaling 1.8 million square feet. Another 52 developments in the planning stages encompass some 3.9 million square feet.

With an inventory of roughly 38.7 million square feet, Phoenix had 8.45 net square feet of storage space available per person, slightly above the national average. Completions are expected to keep up with last year, as 17 properties encompassing approximately 1.5 million square feet came online in 2021. As of October, more than 1.2 million square feet of space was delivered.

5.      Orlando

Rounding out the list, the market had approximately 1.7 million square feet of space underway across 22 projects expanding Orlando’s 27 million square-foot footprint. The pipeline also encompassed 31 projects in the planning stages totaling 2.3 million square feet amounting to nearly 15 percent of the total stock. As of September, of the top 31 markets tracked by Yardi Matrix, Orlando had the strongest annual gains for the 10×10 climate-controlled units at 4.2 percent, while for the similar-sized non-climate-controlled units rates increased 3.4 percent on a yearly basis.

Of our top five markets, Orlando had the highest existing rentable square feet per capita, at 8.99. Completion fell compared to last year, when 15 properties encompassing 1 million square feet came online. Seven projects totaling approximately 470,000 square feet were delivered through the year’s first ten months.