Phoenix ranks No. 5 among most-active self storage markets

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Phoenix ranks No. 5 among most-active self storage markets

Self storage is now as American (and as popular) as Apple Pie. In fact, there are currently more self-storage facilities in the U.S. than all of the Best Buy, Lowe’s, Home Depot, Walmart, McDonald’s, and Subway locations combined. The 2011-2020 period was the third most active decade in self-storage development history, with over 295 million square feet of self-storage space across the country – or about 20% of the total U.S. inventory – per yard. Matrix data. ALSO READ: Phoenix Ranks 6th Hottest Multi-Family Markets The self storage industry is closely tied to life events and socioeconomic factors: moving, home improvement, downsizing, and changes in household composition are just some of the reasons people turn to storage themselves. The needs created by these situations are the main driving forces behind the self storage market. Add in the recent housing boom and you have the perfect context for a thriving industry ready for even more development. Both Dallas and New York, where most homes were added to their local inventory over the past decade, also had the most self-storage space over the same period. As the tenant cohort grows in all major US cities, we wanted to see where people could have easy access to storage space to enjoy life in tidy homes. To find out which locations offer the best self-storage options for tenants, we examined both multi-family and self-storage development trends in the 100 largest US metropolitan areas between 2011 and 2020. Is self storage keeping pace with the space requirements of urban tenants? Dallas & Houston are on the march, but NY is largely undersupplied and keeps rents under pressure.After a slow start at the beginning of the last decade, self-storage construction boomed towards the end of the decade, largely aided by consistent multi-family development. Both sectors peaked in 2018 when over 57 million square feet of self-storage went online and more than 353,500 units shipped in a year. Even as residential construction seemed to calm down in the second half of the decade, self-storage continued to grow rapidly as people prioritized location over space when choosing an apartment. Self storage has established itself as a way to enjoy living in a big way, even when the size of the apartment is shrinking. Even if the 2020 pandemic caused significant disruptions in all economic sectors, self-storage remained relatively unscathed. Demand came from both traditional and new sources, which allowed the industry to see further development that eventually led to more options for tenants. The move remained a strong driver of demand as most urban centers experienced high tenant mobility as many people looked for cheaper housing options, whether it be looking for relaxation in suburban areas or access to wider labor markets in larger employment centers. Additionally, many employers who have had to rearrange office or restaurant space to accommodate physical distancing have created a new demand for self-storage, in addition to displaced students and newcomers to the RV lifestyle taking advantage of this opportunity to get vacation amidst to enjoy from pandemic restrictions. Fast-growing Dallas-Fort Worth is outpacing efforts to respond to growing housing and self-storage needs. Some of the most sought-after subways, of course, have seen the greatest increases in homes and self-storage space. Over the past decade, Dallas’s population has grown by 1.2 million people, according to US census data, attracted by the abundance of job opportunities. D-FW is not only characterized by a solid labor market, but also by a balanced cost of living paired with a high quality of life and cultural diversity. As a result, the influx of newcomers landing in Dallas prompted developers to add more than 173,000 rental units – albeit smaller than historical trends. In fact, Dallas has lost the most housing space of any of Texas’s largest cities in the past decade. This has only spurred the further development of self-storage, with D-FW adding more than 16.2 million square feet of self-storage in the 2011-2020 period – more than any other U.S. metro in terms of total volume. The New York metropolitan area has always been a hot market for both residential construction and self-storage, especially due to the high mobility of people. In fact, over 140,000 homes were added to the New York inventory in 2011-2020, the second largest number of new homes in the country for the decade. The Big Apple may be quick to build new homes, but much like Dallas, building more often means building smaller. The need for additional space is also becoming apparent in the case of NY as developers ramp up building efforts for self-storage. As a result, over 15.7 million square feet of self-storage space was built in New York between 2011 and 2020, the second highest self-storage build volume in the United States during that period. Anecdotally, the market doesn’t seem to be keeping pace with population growth. And despite its historically high delivery levels, the self-storage market is severely underserved at just 3.3 square feet per capita, below the national benchmark of 7 square feet per person. Supported by strong demand, self-storage rentals in New York are among the most expensive in the country. The average street price for a self-storage unit in New York is now $ 185 / month, with only San Francisco, Los Angeles, and Honolulu having higher rents. Houston, on the other hand, with approximately 10.8 square feet of self-storage space per capita, has much lower street prices. A standard storage unit in Houston is now $ 86. Houston has added no less than 14 million square feet of self-storage space over the past decade, the third largest self-storage space increase in the US. Top Metros for Self Storage and Apartment Buildings (2011-2020) Washington, DC is known for its metropolitan entertainment options and numerous career opportunities – including a competitive median wage of around $ 77,200, up 23% over the decade – which all offer the perfect mix for a desirable lifestyle. It’s easy to see why over 630,000 people have made the DC metropolitan area their home in the past 10 years. Around 117,500 residential units were added to the local market, the fourth largest leap in supply for a major US metro between 2011 and 2020. As a result, self-storage options have grown and diversified, with new facilities appearing across the subway area. Over the same 10 year period, no fewer than 77 self-storage units were delivered for a total of 6.2 million square feet. Living in or around LA isn’t exactly cheap, even with growing incomes (the median wage is now $ 63,660 / year, up 24% between 2011 and 2020), but Cali’s glitzy lifestyle is still popular with many coveted in the USA. Over 385,900 people became Angelinos in the past decade, spurring residential construction that eventually led to over 100,600 residential units. On the self-storage front, we saw around 5.1 million square meters of self-storage space in the same period. Despite this impressive level of self-storage construction, LA is another underserved market, with just 4.5 square feet of storage space per capita, well below the national average. Both restrictive zoning regulations and the availability of land have slowed the development of self-storage in LA, which has led to higher rental prices. The average self-storage unit in LA is now $ 193 / month. With its tax-free status, cosmopolitan vibe, and glorious 24/7 weather, you can see why over 600,000 people have moved to the Miami metropolitan area in the past decade. But have these newcomers covered their space needs? In fact, over 88,800 units were shipped in Miami between 2011 and 2020. The local self storage sector responded well to this high level of construction, seeing its inventory increase by over 8 million square feet of lettable space over the past decade. The charm of the south may still draw people to Atlanta, but it’s mostly the subway job opportunities that have fueled massive residential development over the past decade. The impulses from the booming housing market also spread to the self-storage area. The greater Atlanta area added more than 8.1 million square feet of self-storage space, making it the sixth most active self-storage market in this decade. The development trend in ATL continues as it plans to deliver more than 1.3 million square feet of warehouse space in 2021.

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