Self Storage Update | February 2023 Rate and Supply Trends

March 7, 2023

Self Storage Remains Resilient as Demand is Steady

Below, the SkyView team offers insights on the latest rent and supply trends in Yardi Matrix’s top metropolitan areas, covering the most prominent regions of the United States.  

 

In Yardi’s February report, the continued demand for storage is validated by the increase in households utilizing self-storage to this date; “the number of households that use self storage increased to 14.5 million in 2022, up by roughly 970,000 since 2020, according to the latest demand study conducted by the Self Storage Association.”  Moreover, the same study conducted by the Self Storage Association found that the utilization of storage increased just over 11 percent in 2022, further cementing the strong demand. 

 

The market is trending towards a return to normalcy, and it’s important to note that the fluctuation of rates can also be attributed to seasonal slowdown from the Fall of 2022. Seasonality trends were not as prominent during the height of COVID, but now those tendencies are back in force. 

 

As of the February Report from Yardi Matrix, National Street Rate Growth Resides at -2.8 Percent Year-over-Year:

Non-climate 10×10 unit rates are down 2.3 percent, while 10×10 climate-controlled rates were down 4.1 percent. 

 

Street rates still remain well above pre-pandemic levels despite the continuation of a slight decline, according to Yardi Matrix. 

 

While national street rate growth “continued to temper in January”, average street rates remain relatively strong compared to historical performance. Overall, the decrease of 2.3 percent on non-climate units equates to $126, which is a $7 drop from a high of $133 recorded mid-2022. Meanwhile, the aforementioned 4.1 percent drop in climate-controlled units equates to $141, an $11 drop from a high of $152 recorded mid-2022. 

Quick Takeaways:

A key takeaway is that rates are still stable when compared to historical performance, while recent positive signs include an increase in under-construction supply from December to January, highlighted in the under-construction section of the article below. 

Year-Over-Year Rent Change | 10x10 Units

Below is the year-over-year rent change for 10×10 units in 31 of Yardi’s top metro areas in January 2023, reflective of the latest data available. 

*Data Courtesy of Yardi Matrix

Nashville demonstrated the strongest 10×10 climate-controlled rent growth out of all Yardi’s top metro areas listed above. Raleigh-Durham experienced the highest growth in 10×10 non-climate-controlled units.

 

The San Francisco & East Bay Metro, Pittsburgh, and Atlanta demonstrated the sharpest declines in 10×10 climate-controlled rental rates, while Las Vegas experienced the sharpest decline in 10×10 non-climate-controlled units in January 2023.

National Average Street Rates | 10x10 Units

Below the breakdown of national average street rates for 10×10 units drawn from over 32,000 stores across the nation, including a small portion of projects in the new-supply pipeline.

*Data Courtesy of Yardi Matrix

The chart above demonstrates the trajectory of rental rate fluctuation since January of 2021. National average street rates, as mentioned previously, have remained healthy compared to historical trends.

 

As indicated in the visual above, the industry witnessed rental rate growth from February through June of 2021, before leveling off and remaining relatively consistent until summer months of 2022, when averages exceeded $150 for 10×10 climate-controlled units and $130 for 10×10 non-climate-controlled options.

 

There has been a steady, yet slight decline in rental rates since Fall of 2022, as highlighted in the introduction analysis. For January of 2023, the very small decline is evident. While national street rates have dropped over the past several months, self storage owners are subsequently raising rents to match the market. With a strong demand for storage due to the necessity of the asset and a lack of development over the past year, performance still remains strong.

Under-Construction Supply | The Latest Shifts Through January 2023

The chart below indicates the under-construction supply by percentage of existing inventory nationally, based on 32,328 stores analyzed by Yardi Matrix.

*Data Courtesy of Yardi Matrix

In the previous monthly report, it’s critical to note that the national new-supply percentage remained consistent at 3.6 percent from November to December, while the latest report indicates a slight uptick, moving from 3.6 percent to 3.7 percent during December to January. 

 

In the previous Yardi Matrix report, only Atlanta, Philadelphia, and Orlando experienced an increase in under-construction supply percentage. The latest report for January 2023 indicates that Tampa, Miami, Dallas-Ft. Worth, Austin, Los Angeles, Boston, and Philadelphia witnessed an increase in under-construction supply percentage.

Monthly Rate Recap (January YoY Rate Performance)

Below is a monthly rate recap of January 2023 year-over-year rate performance, beginning with the Yardi’s national rate recap, followed by metrics in 31 major metros across the United States. Rate performances encompass the most in-demand climate-controlled and non-climate-controlled storage options. 

To strategize with the industry experts, click below to discuss the best plan for maximizing your asset in the current market. 

*All data from this analysis was derived from Yardi Matrix