Top Self Storage Markets for Rent Growth
We’ve rounded up the top metros based on annual rent gains, according to Yardi Matrix data.
The trend of lowering rates continued across the self storage sector, influenced by seasonality, economic concerns and rising interest rates. On a national scale, the average rate in October was $143, remaining flat year-over-year. The rate decline can be felt across most markets, however, there are a few that disprove this tendency.
The table below highlights the top five self storage markets for rent growth, based on annual increases in average rents, using Yardi Matrix data. Combined, as of October, these markets recorded annual increases between $6 and $18.
|Rank||Market||2021 Average Rent||2022 Average Rent||Year-over-Year Rent Growth||Existing Sq Ft per Capita|
Source: Yardi Matrix
1. Fayetteville, N.C.
Despite Fayetteville’s diverse talent pool produced by Fayetteville State University, Methodist University and Fayetteville Technical College the city’s population remained virtually flat between April 2020 and July 2021, at 208,778 residents according to the U.S. Census Bureau figure. The unemployment rate for the metro stood at 5.7 percent in October, according to preliminary B.L.S data. The figure marks an 80-basis-point increase compared to the previous month and a 10-basis-point improvement over August.
When it comes to year-over-year self storage rent growth, Fayetteville ranked first, one of the two markets on the list with a double-digit increase, at $18. As of October, average rents across the metro stood at $139, representing a 14.9 percent growth, compared to the same period in 2021, when rents averaged $121. Meanwhile, looking at construction activity across Fayetteville, as of October, there were three self storage projects under construction totaling 213,098 square feet to supplement the metro’s 4,979,488-square-foot inventory. To expand the total self storage stock coming in at slightly above 10 net square feet available per person, above the 8.3 national average, the metro’s development pipeline also includes four projects encompassing 330,526 square feet.
2. Fort Wayne, Ind.
Looking at the data for the namesake cities on this list, only the city of Fort Wayne had seen population growth between April 2020 and July 2021, U.S. Census Bureau estimates indicate a modest 80-basis-point increase. According to Greater Fort Wayne Inc., top employers fueling the local economy across Fort Wayne and Allen County are Parkview Health, General Motors and Lutheran Health Network.
As of October, average rents across the metro reached triple digits at $104, marking an 8.3 percent annual increase, as rents stood at only $96 in the tenth month of 2021. With only 7.57 net square feet of storage space available per capita, which sits below the 8.33 national average, Fort Wayne has room for future developments.
The metro’s pipeline includes 162,920 square feet of self storage space under construction across three projects and five planned developments totaling 289,745 square feet. The new-supply pipeline represented slightly over 13 percent of the existing supply as of October.
3. Syracuse, N.Y.
Micron Technology Inc. settling on the town of Clay for its megafab means a $100 billion investment over a two-decade period for the metro. Along with bringing 50,000 employment options to the area, which includes 9,000 high-paying jobs at semiconductor company, Micron will also invest in local workforce development, education as well as affordable housing through the Green CHIPS Community Investment Fund. This boost to the economy will translate into increased demand for housing and self storage space.
Drilling down to the self storage segment, the market registered a little over 7 percent annual increase in annual rent growth. As of October, the Syracuse average rate was $137, below the $143 national average and marked a $9 year-over-year growth.
The market has the smallest self storage footprint, amounting to merely 3 million square feet, or 5.14 net square feet available per person, well below the national average. As oversupply plaguing other markets doesn’t pose a problem, as of October, there was some 195,098 rentable square feet of storage space underway and 369,963 square feet in the planning stages. The development pipeline encompassing 10 projects in various stages represents 18.8 percent of the total inventory.
4. Anchorage, Alaska
Anchorage’s number of residents continues to dwindle, based on estimates, the population dropped to 288,121, marking a 1.1 percent slide between April 2020 and July 2021, according to the U.S. Census Bureau data. Despite the continued outmigration, the Anchorage Economic Development Corp. expects the population to stabilize in the upcoming three-year period and anticipates the local economy to add 1,700 jobs in 2023 as well as in 2024 with 1,100 more jobs gained in 2025, based on their recent outlook report.
Looking at rent growth across the self storage sector, among the metros on the list Anchorage had the highest average rents and was the only market to surpass the national figures in both instances. Last October, average rents reached $158, while this October they clocked in at $169, a nearly 7 percent annual increase.
Despite the market moving contrary to national trend, where rate growth continued to decelerate, development activity remains slow throughout Anchorage. To add to its 2.2 million-square-foot inventory, the metro had a 115,711-square-foot project under construction and a single planned development. The pipeline represents approximately 6 percent of existing stock and will enhance the 7.27 net square feet of storage space available per person.
5. Tulsa, Okla.
U.S. Census Bureau data show an estimated population of 411,401, as of July 2021, a small decrease of 30 basis points compared to the April 2020 value. Overall, the economic outlook for the Tulsa region seems positive, Mark Snead, president and economist at RegionTrack, expects the metro to outperform the state and rural areas, despite a deceleration in hiring next year as well as the expected flat job growth.
The metro rounding out the list has the largest self storage inventory, among the five, as Tulsa had 9.8 million square feet of rentable space as well as the highest existing rentable square feet per capita, at 11.14. Meanwhile, Tulsa was the single metro to not reach a triple digit average rent as of October, when it recorded $98. Year-over-year rent growth represented a 6.5 percent increase, up $6 from the same period in 2021. Development activity has the potential to accelerate over the coming year, as the two under-construction projects totaling 118,753 square feet are joined by nine in the planning stages encompassing 523,525 square feet.