Self Storage Rents Lose Momentum
Although rent performance remained strong on an annual basis, month-over-month rates are showing signs of slowing down.
- National street rates increased 9.4% for 10×10 NON CC and 10.6% for 10×10 CC units year-over-year in September
- Month-over-month rent growth remained flat or negative on a national level
- The new-supply pipeline accounted for 8.5% of existing stock
Self Storage Rents Continue to Decelerate
The self storage sector maintained its positive fundamentals over the third quarter of 2021, with robust rent increases across the country. Year-over-year in September, street-rate rents have increased 9.4% for 10×10 non-climate-controlled and 10.6% for climate-controlled units of similar size.
Despite the strong year-over-year performance, self storage rents continue to show signs of slowing down. On a month-over-month basis, rates for 10×10 non-climate-controlled units stayed level in September at a national average of $128. Meanwhile, rates for the same-sized climate-controlled units decreased 70 basis points, from $147 to $146.
From August to September, merely six, or 20% of the top markets registered positive rate performance for the 10×10 non-climate-controlled units and only four, or around 13%, saw an uptick in rates for the same-sized climate-controlled units.
This is a notable decline compared to the first half of the year when most of the top markets recorded steady growth month-over-month. The slowdown in rate growth might indicate that the heightened demand experienced at the peak of the pandemic is beginning to soften.
Sun Belt Markets Maintain Momentum
The self storage sector continued to benefit from the popularity of the Sun Belt markets among relocating residents and businesses. Miami, yet again, led the nation in rent growth, registering double-digit increases across all unit types, with rates for the standard 10×10 non-climate-controlled units increasing 20% year-over-year in September.
Other Sun Belt metros, such as Atlanta, Austin, Houston or Tampa also showcased strong performance. On a year-over-year basis, Tampa experienced the highest rates for all unit sizes and types in more than 24 months. For the average 10×10 non-climate-controlled and climate-controlled units, rates grew 11% and 14%.
Development Activity Remains Steady
Nationally, projects under construction or in the planning stages accounted for 8.5% of total stock, up 10 basis points over the previous month. Month-over-month, developers broke ground on 26 storage facilities, while 18 projects moved forward into the planning stages. Overall, there were 2,399 self storage properties in various stages of development as of September.
Developers were busiest in Philadelphia. The metro had more than 4.7 million square feet of storage space under construction or in the planning stages, accounting for 19.2% of Philadelphia’s existing inventory as of September.
Despite having 8.8 net rentable square feet available per capita, Raleigh-Durham registered a substantial increase in development activity. From August to September, the metro’s new-supply pipeline grew by 100 basis points, to 7.9%.
Read the full Matrix National Self Storage Monthly-October 2021