- Overall, annual street-rate performance continued its decline, down 2.8 percent as of December.
- Rates for larger units outclassed those for smaller ones, with rates for 10×30 units falling 2.4 percent, while rates for 5×5 units were down 3.4 percent.
- On a month-over-month basis, of the 31 top markets tracked by Yardi Matrix, just one saw rates stay flat, while the others saw rates decline.
- In the upcoming years, there will likely be a slowdown in delivery due to a significant increase in development expenditures coupled with the cost of debt.
The self storage sector closed another successful year as investor interest, which peaked in the summer, remained high for most of the year. Demand didn’t start to decline until the last several months of the year, as illustrated by a gradual easing of street rates and a decline in occupancy. The overall picture for the sector remains favorable due to healthy market fundamentals.
Annually, street rates decreased in most of the markets across the country by the end of 2022. In December, street rates for 10×10 non-climate-controlled units increased in seven of the top 31 metros tracked by Yardi Matrix. Only three of the top 31 markets experienced growth for 10×10 climate-controlled units, while rates decreased year-over-year in the other 28 metros.
Rent decreases affect most markets
December saw a 2.8 percent annual decline in the average national street rate for all unit sizes. Despite the drop, average rates remained higher than pre-pandemic levels. A closer look reveals that rates for standard 10×10 climate-controlled units dropped 3.4 percent to $142, marking a $10 decline compared to their peak values over the summer. Meanwhile, prices for the same-sized non-climate-controlled units fell by 2.3 percent annually to $126. Year-over-year rates for larger units performed better than those for smaller ones, as rates for 10×30 units fell by 2.4 percent, compared to a 3.4-percent reduction for the 5×5 units.
When comparing monthly movements, the downward trend in street rentals continued, as the average street rates fell $2 from their November levels. Pittsburgh was the only metro to defy this trend, with street rates for 10×10 non-climate-controlled and climate-controlled units combined remaining unchanged. In contrast, Orlando, Miami, and San Francisco experienced the highest monthly losses, with a $4 drop.
Yardi Matrix keeps track of 4,627 self storage facilities across the country that are in various stages of development, including 812 under construction, 1,789 planned projects and 669 prospective properties. The rate of projects underway as a percentage of existing stock remained unchanged from the previous month, at 3.6 percent as of December.
Overall, on a month-over-month basis, just three metros added to their under-construction pipeline. Philadelphia registered a 40-basis-point increase month-over-month, upping its pipeline relative to existing stock to 6.4 percent. Orlando, with a 30-basis-point uptick, and Atlanta, a 20 basis-point increase, rounded out the list of metros with expanding development activity.
Read the full Matrix National Self Storage Monthly-January 2023