Self Storage Market Recap

Zachary Urow April 30, 2024

Self Storage Market Recap

The ISS World Expo and Toy Storage Nation Workshop took place in Las Vegas earlier this month. Here, presenters emphasized the challenges within the market including unclear pricing, difficulty obtaining financing, and plummeting street rates – particularly among the public companies.

The current leasing strategy has made street rate growth increasingly negative in the recent months. Due to a lack of transparency into in-place rates, the acquisition-and-development space has become less certain. However, developers are continuing to move forward with projects according to Yardi’s supply data.

Leasing Strategies Impacting street Rate Performance

REITs are dropping street rates to attract new customers, forcing smaller operators to follow suit to avoid occupancy declines. Same-store street rate growth for all REITs was -6.6% YoY, nearly double the decrease of 3.6% for all non-REIT owned properties in the same market.

Street Rate Performance Weakens In Sun Belt Metros

Cities within the Sun Belt Metro such as Miami (-7.5%), Atlanta (-7.2%), and Tampa (-6.9%) had the weakest performance in same-store asking rates for 10×10 NCC units YoY in March. These areas have attracted strong developer interest in recent years.

New Supply Update

The national new-supply pipeline remains steady, at 3.7% of total existing supply at the end of March. Despite weak street rate performance and a tight capital market, this indicates there is still developer interest in self storage. This was also shown by the number of ISS conference attendees.