Storage Rent Drops Continue along with Strong 2023 Development Pipeline

• Self storage rates dropped by 3.05% year-over-year nationwide in April 2023
• On a month-by-month basis, street rates remained the same at $127 on average for 10×10 non-climate-controlled units
• New Orleans is the city with the most reduced storage rates since the previous year, dropping by 18.5%
• Texas’s Houston and San Antonio have the largest amount of storage planned for 2023: 743K and 707K square feet, respectively
• Elk Grove, CA, and Aurora, IL, are increasing their storage inventories the most this year, with Philadelphia being the large city that is doing this most actively

A standard 10’x10’ storage unit rented for a monthly average of $127 nationwide in April 2023. This street rate is the same as the average recorded in the previous month. However, compared to a year before, this rate is still a decrease of 3.05%. Among the 150 largest cities in the US, around 77% saw year-over-year declines in the average street rate for a standard storage unit.

Nationally, 53.8M square feet of rentable storage space is scheduled to be added this year. Texas cities plan to develop the most, while the Las Vegas Valley area will also increase its inventory considerably. Many smaller U.S. cities are also upping their storage game to respond to the solid demand for space away from home. While some are compensating for low inventory, others are responding to confidence in their expanding economies and populations.

New Orleans Continues to Lead National Storage Rates Drop

As with other real estate services, self storage highly depends on the laws of supply and demand. In many cases, when a city has a declining population or an inactive housing market, there’s less moving activity and a tendency for storage rents to trend down. Similarly, a relatively generous local inventory can put downward pressure on rents.

These factors join other local circumstances to create a context for a market slowdown in New Orleans, LA, the city with self storage street rates dropping most dramatically year over year. It has not only experienced a 3.7% population decline over the last couple of years, as per the U.S. Census, but its housing market has also been cooling — with higher interest rates and large insurance premium increases cited among the reasons — and this situation may not change just yet.

Along the same lines, Detroit, MI, has seen a substantial rent decrease, 11% year over year. Compared to March 2023, Detroit rates have fallen 8.1%, which is by far the steepest month-over-month drop nationwide. Motor City’s population is also declining, by about 3% in the last two years. But while local home sales have slumped in recent times, in March 2023 they were double the previous month’s deals, and the storage sector will be taking note.

The Jacksonville, FL, self storage sector’s year-over-year decrease in April 2023 is a continued adjustment of the city’s very high inventory, though with its strongly increasing number of residents, month-over-month performance is levelling out.

East Coast Cities See Double-Digit Storage Rent Increases

Year-over-year, storage street rates rose in around 17% of large US cities in April 2023 and they stayed the same in a further 5% of them.

In April 2023, Arlington, VA, joined Newark, NJ, in having double-digit year-over-year street rate increases, with a huge $25 addition to its average rent during that time. These cities’ very low provision of self storage per capita keeps their street rates soaring. Buffalo, NY, and Tacoma, WA, which added $5 to their average rents over a year, are also under-provided in this regard.

Population growth generates demand for storage, encouraging providers to boosts their rents. Self storage in Californian cities Bakersfield and Fresno is on a positive trajectory for facility operators, the already generous storage provision per capita being balanced out by their increasing numbers of residents. Fayetteville joins them with both a growing population and a high storage availability, which is typical of North Carolina.

Anchorage, AK, was the only top-10 city for rising rents, apart from Newark, that experienced a month-over-month drop. While renting storage in a climate like Anchorage’s makes a lot of sense, the city’s population has been decreasing for some years, inevitably having an effect on storage developers’ plans.

Texas Cities Have Biggest Plans to Develop Storage in 2023 While the Las Vegas Valley Builds Confidently

Some regions of the US have an entrenched enthusiasm for self storage, as sales market activity in the sector indicates, with Texas and Nevada leading national development plans for 2023 as well.

Top 100 Cities for 2023 Expected Construction

Texas cities have long been known for self storage generosity, with square footage per capita around the national average or higher and inventories that grow with the population and are often aided by local zoning laws. Renting a storage unit in Houston or in San Antonio will soon become even easier as each city plans to add more than 700K square feet of rentable space this year, and Fort Worth is not far behind.

The Las Vegas Valley metropolitan area continues its reputation for storage provision — offering overall a very healthy 9.25 square feet per capita — despite having declining year-over-year street rates, and the city of Las Vegas is projected to add around 500K square feet this year. The ambitious plans of North Las Vegas to grow its storage inventory by more than a fifth in 2023 is accompanied by projections in neighboring Henderson — which is adding close to 200K square feet — and Vegas itself.

Elk Grove, CA, & Aurora, IL, Increase Inventories Most While Philadelphia is the Largest City Seeking to Supercharge Its Storage

A city with an expanding economy and population attracts developers who can increase the local storage inventory with a degree of confidence. And smaller cities are now catching up with larger ones as appreciation of the service becomes still more widespread.

The Californian wine-growing city of Elk Grove is registering the highest scheduled storage increase this year — its economy grew by as much 15% between 2010-2020. The plans of Chicagoland’s Aurora, IL, to increase its rentable square footage by around half as much again are despite a declining population and falling storage rents, but it is catching up with Chicago itself, which has a higher storage provision per person.

Several other cities with populations of only 200K or less punch above their weight in terms of storage. Knoxville, TN, self storage, despite already offering a very generous 10 square feet per person, will add 15% to its local inventory, while Santa Clarita, CA, and Worcester, MA, are compensating for much local storage provision.

Philadelphia, PA, is by far the largest city in the top 20 of 2023 storage developers, adding 10% to its already huge inventory of 5.6M square feet. Los Angeles, CA, is the only city with over a million residents that comes close, but even with a lower provision of 1.7 square feet per person, it is increasing inventory by only 7% this year.

"The US self storage industry’s standing will be boosted in 2023 by additions to its inventory. But, as with the real estate sector in general, these will be less than were seen during the peak periods in 2018 and 2019. One potential brake on development could be rising interest rates, causing headwinds for the financing of construction projects, with some of these perhaps getting delayed until the last quarter of 2023," said Doug Ressler, business intelligence manager at Yardi Matrix.

"The year-over-year outlook for self storage is favorable, however, based on current performance indicators, and capital is obtainable at the moment for acquiring self storage premises. Nevertheless, the costs of borrowing can still become an obstacle to closing deals. On top of this, additional interest payable on investments combined with tighter cap rates may result in changes of business focus. Many storage-savvy investors may be encouraged to look away from top-tier city-center properties and turn instead to possibilities in more distant exurbs or in smaller towns."

While storage street rates carry on falling year-over-year in many U.S. cities, they are also still stabilizing on a monthly basis overall. Places with long-standing traditions for storage usage continue to develop more, and they are joined by cities that are experiencing the confidence engendered by growing economies and populations.

Methodology

This analysis was done by RentCafe Self Storage, an online platform that provides apartment and storage unit listings across the nation.

The report sets out to investigate self storage prices and market trends in April 2023. For city-level data, we looked at 150 of the largest U.S. cities by population that have at least 10 self storage facilities.

Storage provision per capita was calculated by ascertaining both the population and the square footage of rentable storage units within a 3-mile radius from the center of any city.

All figures relating to storage square footage refer to rentable space.

Data on self storage street rates and construction estimates for 2023 came from our sister division Yardi Matrix, a business development and asset management tool for brokers, sponsors, banks and equity sources underwriting investments in the multifamily, office, industrial and self storage sectors.

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