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Examining Supply’s Effect on U.S. Self Storage Industry
New supply is continuing to depress U.S. self storage street rates, which dropped in around 75% of the top U.S. markets, according to the Yardi Matrix national self storage report for December 2019.
The firm reported that street rates for standard 10×10 non-climate-controlled units fell 1.7% year-over-year in November. The drop for similar-size climate-controlled units was even steeper. Only Las Vegas, Los Angeles and California’s Inland Empire had year-over-year rate growth in both unit categories.
Projects either under contrition or in the planning stages accounted for 9% of the total nationwide stock in November, a 0.2% month-over-month increase.
“Ongoing heightened completion levels continue to weigh on street rates and the storage industry is in for a continued tough slog,” the report says.
New York City saw the biggest uptick in development of the top markets tracked by Yardi Matrix going up 60 basis points month-to-month. The firm noted that New York City is the most undersupplied metro due to local regulations and limited available land.
Other growing markets include Orlando, where an expanding job market has supported new self storage development. The Orlando metro added more than 54,000 jobs in the 12 months ending in September. Developers have responded to Orlando’s growing population, and the percent of projects in the under-construction or planning stages, compared to total stock, increased 50 basis points from October to December.
But, despite growth in certain markets, a majority are seeing negative street rate performance.
Houston and Charlotte tied for the lowest street rates as of November ($84 per unit) for standard non climate-controlled units, with both metros experiencing a 3.4% decline in rates year-over-year.
Street rates for standard non climate-controlled units fell the furthest in the saturated Charleston metro, decreasing 8.9% year-over-year to $92 per unit.
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