Self Storage Remains a Strong Performer, Hits New Records
Self storage continues to surge, as demand pushed even some previously oversaturated markets to strong growth.
· National street rates rose 10.4% for 10×10 NON CC units and 12.4% for 10×10 CC units.
· Oversaturated markets recorded double-digit rent growth.
· The new-supply pipeline accounted for 8.5 percent of existing inventory.
Self Storage Rents Maintain Strong Growth, Miami Leads the Way
National street rates for 10×10 non-climate-controlled units increased 10.4% year-over-year in July, to $127, the highest price recorded since Yardi began tracking rates in 2016. While rates increased 12.4% for 10×10 climate-controlled units, reaching $145, falling just short of the $147 registered in August 2016. On a month-over-month basis national street rates also increased for both unit types, up 80 basis points for the standard non-climate- and 1.4% for climate-controlled units of similar size.
All top markets saw positive rent growth for both unit types year-over-year in July, with Miami leading growth. The metro saw rates increase 24% for 10×10 non-climate- and 21.2% for climate-controlled units of similar size.
Oversupplied Austin and Charleston Continue Steady Rebound
Despite significant supply, equal to 11.4 net rentable square feet per capita, rates in Charleston have continued to recover. Since January this year, street rates for 10×10 non-climate-controlled units recovered 9.7% reaching $102 in July, while rates for the same-sized climate-controlled units fared even better over this period, climbing 12% to $131. Thanks to heightened population growth driven by the pandemic, Charleston might be able to withstand the supply pressure that the metro felt in recent years, leading to further growth in the future.
Heavy deliveries in recent years also hindered growth in Austin, where the per-person inventory equates to 10 net rentable square. However, thanks to the pent-up demand the metro has seen rates rebound in 2021. On a year-over-year basis, street-rate rents increased 12.5% for the average 10×10 non-climate-controlled and a significant 18.8 percent for climate-controlled units of similar size. Asking rates reached $108 and $139 for 10×10 non-climate- and climate-controlled units in July, prices not seen in Austin since 2016.
Development Activity Shows Signs of Acceleration
Nationwide, projects under construction or in the planning stages accounted for 8.5 percent of existing stock, marking a 20-basis point uptick over June. On a month-over-month basis, 26 under construction and 24 planned projects were added to the national pipeline, which encompassed 2,357 self storage properties in various stages of development as of July. The sector’s strong performance might increase developer’s appetite, resulting in accelerated supply growth in the near future.
Due to limited supply, with only 3.6 net rentable square feet available per person, New York continues to attract developers. The metro led the nation in constructions, with the new-supply pipeline increasing from 18% in June to 18.3% in July. Orlando was the only top market to record a drop in development activity. The metro’s new-supply pipeline shrank by a minor 10 basis points month-over-month, to 11.4%.
Read the full Matrix National Self Storage Monthly-August 2021