The self-storage sector maintained its strength throughout the first quarter of 2021, with continued positive street rate performance and steady development across the country. Despite rising building material costs, self-storage developers have continued to add new self-storage construction projects to their pipeline. ALSO READ: Phoenix Ranked # 5 in US for Self Storage Investment In March, the US had more than 125.7 million square feet of self storage under construction or planning, representing 8.4 percent of total inventory the country made up 20 basis points from the previous month, according to Yardi Matrix data. The following table shows the top 10 markets for the construction of self-storage systems, sorted according to the total area under construction or in planning (as of March 2021). 10. SAN DIEGO The economy of San Diego was rocked by the pandemic, but the subway was able to recover many of the jobs lost at the beginning of the crisis. The unemployment rate in San Diego fell to 7.2 percent in February 2021, slightly above the national figure of 6.6 percent, according to preliminary data from the US Bureau of Labor Statistics. Employment gains were recorded in the mining, logging and construction sectors, which created 3,200 jobs in the 12 months ended February. Despite the macroeconomic uncertainty in San Diego, self-storage development activities remained stable in 2020. Last year, the metro hit a new delivery cycle high with a total of 774,216 square feet of completed warehouse space. This year seems to be busy for self-storage developers in San Diego too – the subway had about 2.3 million square feet of warehouse space under construction or in the planning phase as of March, of which more than 450,000 square feet were added over the course of the pipeline were the first quarter alone. With around 18 million square feet of inventory, the market has only 5.8 net square feet of storage space per capita, which is below the national average of 6.7. 9. SACRAMENTO Increased stakes in government, education, health care, and other key workplaces helped Sacramento better weather the effects of COVID-19. Additionally, the subway’s multi-family market saw significant growth thanks to accelerated migration from the San Francisco Bay Area during the pandemic, which also underscores the demand for self-storage space. Although the Sacramento warehouse market is slightly oversupplied at around 8 net square feet per person, street rents rose 2.7 percent and 2.3 percent for both the standard 10×10 climate and non-climate controlled units. in March year-on-year. In March, the metro saw a robust development pipeline with 30 projects under construction or in the planning phase, spanning more than 2.3 million square feet. The ongoing pipeline represented 13.2 percent of Sacramento’s existing inventory, 10 basis points less than the previous month. 8. TAMPA – ST. PETERSBURG – CLEARWATER Thanks to the rapid population growth in recent years, Tampa is one of the fastest growing cities in Florida. As the health crisis spurred the popularity of lower-cost subways, Tampa continued to attract businesses and residents over the past year. According to a study by Roofstock, the metro’s population is projected to exceed 3.8 million by 2040. The strong population growth has also sustainably supported the development of self-storage in Tampa. The new build peaked in 2018 when more than 2.6 million square meters of storage space was delivered. Although self-storage product development has slowed slightly in recent years, the subway still has a significant development pipeline. As of March, projects under construction or planned totaled more than 2.4 million square feet, which is 8.9 percent of the metro’s 26.8 million square feet. 7. FORT WORTH After the development boom in 2018, the self-storage market in Texas is notoriously oversupplied. Along with Houston, Austin and San Antonio, Dallas-Fort Worth was forced to limit its new development pipeline to balance supply and demand. While the economic impact of the pandemic cornered Dallas-Fort Worth in the past year, the pent-up demand for storage space has created a favorable environment for the self-storage industry. Street prices in March rose 2.2 percent year-over-year for the average 10 × 10 non-climate-controlled units and 1.8 percent for similar-sized air-conditioned units. The increased demand for self-storage has apparently restored developers’ confidence in the subway. As of March, Fort Worth alone had 27 projects in the pipeline totaling more than 2.4 million square feet. The proportion of projects under construction or in the planning phase accounted for 10.3 percent of Fort Worth’s 23.8 million square meter portfolio. 6. SAN FERNANDO VALLEY – VENTURA COUNTY Despite moderate construction activity over the past ten years, the region’s self-storage market is becoming increasingly popular with developers. Four projects totaling 482,042 square feet were delivered last year. Development activities accelerated even further in 2021, with eight projects under construction and 18 in the planning phase, with a total of nearly 2.5 million square feet of warehouse space. The new delivery pipeline accounted for 13.3 percent of the market’s existing inventory. With a completed inventory of 18.5 million square feet, the San Fernando Valley-Ventura County region has only 5.2 net square feet of warehouse space per capita, below the national figure of 6.7. Low inventory levels and ongoing relocations from the Los Angeles Basin could provide an opportunity for further self-storage growth in the area. 5. COAST SOUTHWEST FLORIDA Southwest Florida is another region that has benefited from relocations from major gateway cities. Thanks to the lower cost of living, the area will continue to attract residents and businesses from across the country. Additionally, Cape Coral and Fort Myers were listed in the top 10 most promising real estate markets in the country in 2021, according to the National Association Realtors, the Business Observer reported. The growing population of the region and the emerging real estate market will further boost development activities for self-storage. As of March, Southwest Florida had approximately 2.5 million square feet of warehouse space under construction or in the planning phase, accounting for 14.5 percent of the region’s 17.5 million square feet of inventory. 4. CENTRAL NEW JERSEY After a year with only three new deliveries in Central New Jersey, construction activity picked up. As of March, seven projects were underway and 30 in the planning phase, covering a total of nearly 2.6 million square feet. The central New Jersey market’s self-storage inventory is approximately 12.2 million square feet. At 4.3 square meters, its net inventory per person is below the national average. Central New Jersey is likely to attract more self-storage developers in the future as nearby high-barrier markets like New York City have become increasingly competitive and have limited opportunities for new developments. 3. LAS VEGAS The Las Vegas self-storage market has benefited from the significant population growth of the metro in recent years. According to July 2019 estimates, the metro has gained more than 315,000 residents since the 2010 census. Despite the sharpest economic decline due to the pandemic, the unemployment rate in Las Vegas has gradually recovered in recent months – the unemployment rate was 9.3 percent in February, according to preliminary BLS data. Although the subway has been struggling since the health crisis began, developers have kept up its activity. The evolution of self-storage has gradually accelerated since 2016 – the metro hit a cycle high in 2020 when nine properties were delivered for a total of 892,367 square feet. As of March, Las Vegas had more than 2.6 million square feet of warehouse space under construction or in the planning stage, accounting for 14.7 percent of the subway’s total inventory. 2. ORLANDO Prior to COVID-19, Orlando experienced strong economic growth supported by relocation of businesses from the northeast. Healthy market fundamentals drove demand for self storage – in the past decade, Orlando has added more than 6.8 million square feet of inventory to its inventory. Although the coronavirus outbreak has hit key subway industries, self-storage projects have not stalled. As of March, Orlando had just over 2.7 million square feet of warehouse space under construction or in the planning phase, which is 11.1 percent of the inventory. The metro had 11 projects under development and 28 in the planning phase. 1. PHOENIX While the effects of the Phoenix pandemic did not go unnoticed, the subway has been lauded for its healthy market bases and ability to withstand the effects of economic hardship. Although the self-storage market was also in decline, Phoenix was able to recover. Annual street prices rose from March by 3.8 percent and 6.5 percent for the average 10 × 10 units without air conditioning and air conditioning. In 2020, developers added 22 facilities to Phoenix’s inventory for a total of 2.3 million square feet. Despite the subway’s slightly oversupplied status of 7.5 net square feet of storage space per capita, developers in the market seem optimistic – as of March, Phoenix had around 4.4 million square feet of storage under construction or in the planning phase. 13 percent of the total stock. This story was originally published on Multi-Housing News.
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