On a monthly basis, 24 out of the 30 metros recorded contractions, while the remaining six saw advertised asking rent growth, according to the latest Yardi Matrix self storage market outlook.
Key Takeaways
- As of August, advertised asking rent movement continued to be negative, with the average annualized same-store asking rent per square foot down 4.3 percent for the combined mix of unit sizes and types.
- Same-store advertised asking rates for the combined non-climate-controlled units were down 3.8 percent year-over-year, while rates for climate-controlled units fell by 5.1 percent.
- Six out of the top 30 metros tracked by Yardi Matrix showed growth month-over-month, while the remaining 24 saw contractions, as per square foot rates were down 0.5% or eight cents, to $16.31.
- The national-under construction pipeline equaled 3.4 percent of existing inventory, shrinking 10 basis points month-over-month.
Month-over-month decline in advertised asking rent
In August, the national average annualized same-store advertised asking rent per square foot was $16.31 for the combined mix of unit and sizes. This figure marked a 4.3 percent decrease compared to August 2023. Rates for combined non-climate-controlled units fell by 3.8 percent on a year-over-year basis as of August, while same-store advertised asking rates for climate-controlled units decreased by 5.1 percent. NCC units are performing better than CC units based on customer preference and the new supply of CC units which weighs on rates.
In August, all top 30 metro areas had negative advertised street rate growth year-over-year. The decrease in combined same-store advertised rates for non-climate-controlled units and same-store climate-controlled units ranged between -0.3 percent in Washington D.C. and -9.4 percent in Atlanta.
A slower pace in new development
On a national level, new supply in the last three years has accounted for 8.7 percent of stock at the beginning of the period. Meanwhile, deliveries equaled 2.8 percent of that amount during the previous 12 months.
Development interest in Atlanta has been on the rise due to the metro’s strong performance during the pandemic, which has now led to more than 1.1 million square feet of construction starts in the metro’s suburbs thus far in 2024. Over the past three years, deliveries in Atlanta equaled 12.4 percent of starting inventory, resulting in a weak performance and a 10.0% annual drop in advertised rates for main unit types and sizes.
Yardi Matrix keeps track of a total of 3,408 self storage properties in various stages of development across the U.S. The development pipeline included 837 under construction, 2,063 planned and 508 prospective properties. As of August, the under-construction pipeline accounted for 3.4 percent of stock, down 10 basis points month-over-month.
San Jose’s pipeline of new supply under construction decreased to 0% of existing stock in August, due to a lack of construction starts in 2023 and 2024, which should help the market in the near term. Meanwhile, despite the lack of monthly increase, Orlando is the top market with the largest under construction pipeline at 6.9 percent. Raleigh-Durham remains the market with the largest uptick, up 60 basis points, followed by Nashville and Charlotte.
A slower pace in construction activity is visible due to the interest rates and rental rate movement. The Yardi Matrix forecast also showed a 9.4 percent decline in deliveries in 2024 from 2023.
Read the full Yardi Matrix National Self Storage Market Outlook: September 2024
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