Storage Rents Remain Level on a Month-Over-Month Basis
Self storage fundamentals signal a strong spring rental season for the sector.
Report Highlights:
- National street rates increased 7.6% for 10×10 NON CC and 7.4% for 10×10 CC units year-over-year in February
- Month-over-month rent growth remained flat or negative on a national level
- The new-supply pipeline accounted for 9.2% of total inventory
Thanks to record gains over 2021, the self storage industry is starting the spring rental season in a more favorable position, despite slowing rent rates over the winter. National street rates for 10×10 non-climate-controlled units grew 7.6% on a year-over-year basis in February, while rates for 10×10 climate-controlled units increased 7.4%.
From January to February, national rates stayed flat for 10×10 non-climate-controlled units at $128, while rates for same-size climate-controlled units fell $1 to $145.
Nonetheless, some metros experienced substantial growth on a month-over-month basis. For instance, rates in Seattle increased a combined $2 for 10×10 climate-controlled and non-climate-controlled units, pushing up the year-over-year rate growth by 120 basis points. Pittsburgh saw storage rates grow 0.8 percent over January, while Los Angeles recorded a 0.5 percent uptick. Overall, 10 metros experienced combined street rates decrease by $1 month-over-month, and 18 metros out of the top 31 metros tracked by Yardi Matrix saw no shift in rates.
Seasonality Hits Northeastern Markets
Growth was yet again led by markets in the Southeast and the Southwest as demand remained strong, allowing rents to stabilize at a new higher rate. At the same time, the effects of seasonality have had more impact in the Northeast, as demand in the region topped out in the second half of 2021. Despite this, industry experts expect market fundamentals to remain healthy in this region as well.
Although some of the pandemic-driven demand started to weaken in the past couple of quarters, fundamental lifestyle changes continue to fuel the heightened need for storage space. This also includes the growing need for RV and boat storage across the nation.
Appetite for New Product Remains High
Considering that there’s little to no correlation between the new-supply pipeline, completed net square feet available per person and growth in street rates, developers continue to add new projects to the inventory. Nationwide, projects under construction or in the planning stages accounted for 9.2% of existing stock, up 20 basis points over the previous month.
There were 3,864 self storage properties in various stages of development as of February. This included 730 projects under construction, 1,359 planned and 532 prospective properties. Despite developers’ appetite for new projects, increasing construction and material costs will likely cause delays in the development process, helping markets to maintain equilibrium in the near term.
Read the full Matrix National Self Storage Monthly-March 2022
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