State of Self Storage

By on Mar 9, 2022 in Matrix

The self storage sector continues to weather economic conditions that are likely to become more challenging in the near term, attendees of a webinar presented this week by Yardi Matrix learned.

“There are several headwinds that might be getting a bit stronger,” said Jeff Adler, vice president of Yardi Matrix, during the Wednesday presentation. Supply chain disruptions, a tight labor market and inflationary pressure, in addition to the geopolitical tensions between Russia and Ukraine, will all slow economic growth in the U.S., Adler said.

A recording of the webinar and presentation materials are now available for download.

However, despite the potential of a looming recession that Adler expects will arise by late 2024, the overall outlook for the self storage sector is healthy at present.

“The outlook for self storage remains optimistic given persistent demand and a slow supply response. We anticipate growth will continue, but moderate,” Adler said. “Investor interest is incredible in the sector, given its performance and defensive nature, which has proven itself out.”

Matrix analysts expect that self storage street rates will continue to grow in 2021, just at a more modest rate. Additional high level takeaways from the webinar include:

  • Street rate growth will continue to be highest in favored migration areas, such as the Sunbelt and mountainous areas of the West
  • Driving forces of demand will continue, including: people are still relocating, just at a slower rate; Americans have accumulated “stuff” during the pandemic that needs to be stored; and self storage remains the cheapest way to store accumulated possessions

Self storage street rates changed little sequentially in January, reflective of positive trends in the industry, and rents remain well above trend on a year-over-year basis, according to the latest Yardi® Matrix National Self Storage Monthly report.

Year-over-year rent growth remained positive in all major metros last month, with 11 of the top 32 metros at 10 percent or more growth and 25 of the top 32 at 5 percent or more growth for NON CC units.

Rent increases continue to be highest in the Sun Belt and the Southwest, with demand fueling notable jumps in Texas, Florida and the Carolinas.

With healthy demand for storage units, many new projects continue to come online. The first quarter completions forecast for the sector has been marginally expanded over last quarter, Adler reported.

“However, construction completion times and supply delays are moderating the pace of new deliveries,” he said.

Matrix is forecasting 50.44MM net rentable square feet will be delivered in Q1 2022, a modest increase over the Q4 2021 forecast of 50.25MM net rentable square feet.

Adler also shared that Yardi Matrix is now tracking RV and boat storage in addition to its many other research areas. Learn more about RV and boat storage performance in the newly released report.