The self storage industry has been on an upward trend for years, particularly when it comes to new construction. The US currently has over 1.4 billion square feet of self storage space, of which 190 million square feet, or 13%, were built in the past five years.
This inventory burst led to lowering rent costs across the country––a shift that’s been accelerated during the past few months by the COVID-19 pandemic and ensuing economic slowdown. The average national rent for a 10X10, non-climate-controlled unit (non-CC) was $113 this July, representing a 3% drop year-over-year, according to Yardi Matrix data.
Despite the recent trends that show lowering rates, self storage still benefits from strong demand which helps keep the industry afloat, even during these challenging times. “While street rates have fallen quickly and dramatically, many operators are reporting strong collections and decent rental activity”, reported Chris Nebenzahl, Institutional Research Manager at Yardi Matrix for our sister division STORAGECafé.
Recent research from STORAGECafé analyzed the country’s 100 biggest metro areas to rank the most actively expanding self storage markets in 2019. The top 10 markets that saw the most self storage construction last year have all also experienced recent rent decreases, mostly due to elevated supply levels and the uncertainty created by COVID-19.
Let’s take a more in-depth look at the 10 metro areas that added the most self storage space in 2019 and how their street rates have fared.
1. New York-Newark-Jersey City
The New York metro area added a record 3 million square feet of new storage space in 2019 – that’s almost double the size of Yankee Stadium, reaching a total inventory of over 59.7 million square feet. Even though 2018’s storage space additions in this metro were high – 2 million square feet – the 2019 expansions surpassed them by 30%.
But the New York metro area is still undersupplied in terms of per capita self storage space. While the national average stands at 7 square feet of storage space per capita, New York averages only 3.1 square feet.
Under these circumstances, it’s not at all surprising that New York metro is one of the country’s most expensive areas for self storage. Renting a storage unit in NYC cost about $169 this July, significantly above the national average of $113. The good news for the metro’s consumers is that street rates are on a descending trend, down by 2% year-over-year.
Phoenix metro takes the second spot nationally for new developments in 2019. This metro area added 2.3 million square feet of brand-new self storage space – that’s about twice the size of Chase Field Stadium, and twice as much as was constructed in 2018. Another 23 new facilities totaling 1.7 million of storage space are expected this year.
Phoenix-Mesa-Scottdale has a healthy 7.5 square feet of storage space per capita, but the strong demand is keeping the street rates almost unchanged. The average monthly street rate for a 10×10, non-CC self storage unit in Phoenix metro stands at $104, representing a slight 1% decrease year-over-year.
3. Dallas-Fort Worth-Arlington
The Dallas metro area has over 62.7 million of self storage space, enjoying a roomy 9.8 square feet of space per capita, the result of several years of intense new construction activity. 2019 brought 2 million square feet of new storage space – that’s about two thirds of the AT&T Stadium.
However, last year also marked a steep decline, after 2018 saw 3.1 million square feet of storage space added in the Dallas metro– the most ever built in any US state in one year.
The average monthly rate for a 10×10, non-climate-controlled storage unit in Dallas metro currently stands at $92, which is a 2% drop year-over-year.
4. Atlanta-Sandy Springs-Roswell
Atlanta metro has more than 37 million square feet of storage space, translating into 7.1 square feet of space per capita. Over 1.7 million square feet of space were completed in 2019, approximately the size of the Mercedes Benz Stadium.
Last year’s expansions represent a slight decrease compared to 2018 though, when 1.8 million square feet of space were added to the metro’s inventory. This year, 22 new properties are on the pipeline and are expected to add about 1.5 million square feet of new space.
The average monthly rate for a 10×10, non-CC storage unit in Atlanta metro area was $91, representing a steep, 8% decrease year-over-year.
5. Minneapolis-St. Paul-Bloomington
With about 1.7 million square feet of storage space delivered last year, almost the size of the U.S. Bank Stadium, Minneapolis is the country’s fifth most-active market in terms of new construction. Adding more space has been on an upward trend in the area for the past three years –only about 350,000 square feet of new storage space was built in 2017.
That number almost tripled in 2018, to around one million square feet, and topped 1.7 million square feet in 2019. Another 1.3 million square feet of new self storage space are in the works, set to be done by the end of 2020.
Twin City area residents have 5.1 square feet of storage space per capita, which is under the national average of 7 square feet. The street rates, however, are on a steep downward trend – a 10×10, non-CC self storage unit in Minneapolis was $105 this July, representing a 9% drop year-over-year.
Orlando metro has a total inventory of more than 17 million square feet of storage space, of which 1.6 million square feet were added in 2019. Last year’s additions combined are twice the size of the Camping World Stadium.
The previous years saw more modest expansion, from just over 100,000 square feet in 2015 to around 600,000 in 2017. Forecast data shows that 19 facilities will be adding new storage space in 2020, totaling 1.5 million square feet.
As of now, Orlando metro area boasts 8.3 square feet of storage space per capita––one of the highest values nationally. The monthly rate for a standard 10×10 storage unit in Orlando metro area stands at $98, with a 6% decrease year-over-year.
7. Miami-Fort Lauderdale-West Palm Beach
Another Floridian metro that made the top 10 of the country’s most active markets for new construction is Miami-Fort Lauderdale-West Palm Beach. The area added nearly 1.6 million square feet of self storage space in 2019, more than the size of its Hard Rock Stadium.
Miami metro has a total inventory of 36.5 million square feet of self storage space, resulting in a moderate 6.6 square feet per capita. The average street rate for a 10×10, non-CC self storage unit in Miami was $125 this July, representing a 4% decrease year-over-year.
Chicago-Naperville-Elgin saw a sustained construction activity in 2019, adding 1.5 million square feet of new self storage space, almost four times the size of Soldier Field. 2019 additions followed an expansion trend in the past few years for this area. 2016 was the most active one, with over 2 million square feet added to the metro’s self storage space inventory. 2017 and 2018 saw 1.6 and 1.2 million square feet of new space, respectively.
The area’s total inventory stands at 46 million square feet of storage space, translating to a below-average 4.9 square feet per capita. The monthly rent for a self storage unit in Chicago area was $97 this July, dropping 5% year-over-year.
9. Houston-The Woodlands-Sugar Land
Houston metro is the second market in Texas that makes it into the top 10 of the most active self storage markets for new construction, after Dallas. The Houston metro area added 1.5 million square feet of space in 2019, which is a notable slowdown compared to 2018, which banked almost 3 million square feet of new storage space.
Houston-The Woodlands-Sugar Land has a total inventory of over 62 million square feet of self storage space, resulting in a generous 10.5 square feet per capita. Street rates in this area are declining, reaching $82 per month this July for a 10×10 self storage unit in Houston, a 4% decrease year-over-year.
Portland metro added 1.1 million square feet of new storage space in 2019, four times the size of its Providence Park Stadium. This was significantly higher compared to 2018, when about 700,000 square feet of space were added, or compared to 322,000 in 2017.
Currently, Portland metro area has a total inventory of almost 14 million square feet of rentable self storage space, which results in 6.2 square feet per capita. The street rate for a 10×10, non-CC storage unit in Portland stands at $136, well above the national average, but on a downward trend, dropping 4% year-over-year.
The sustained property development activity in the self storage sector is also backed up by new demand sources that emerged during the COVID-19 pandemic, such as students relocating on short notice or businesses re-designing their locations to comply with the social distancing rules. Although street rates saw a steep decrease this spring, the summer months showed some signs of recovery, once again proving the industry’s resilience to economic turbulence.