Fueled by Apartment Construction, Self Storage Thrives: Dallas, Atlanta, DC among Top Cities Delivering Extra Space

Key takeaways:

• The US added over 295M square feet of self storage between 2011-2020, roughly 20% of the existing national inventory.
• Dallas-Fort Worth has added the largest volume of self storage space (16.2M square feet) over the past decade, surpassing New York, Houston and Chicago.
• In terms of growth rate, Milwaukee, WI, has seen the largest inventory expansion among the largest 100 metros in the country — a 68% growth in self storage stock in 2020 compared to 2010. Austin, TX, Des Moines, IA, and Madison, WI, have also amplified local inventory by more than 50% in the past 10 years.

Self storage is now as American (and as popular) as apple pie. In fact, there are currently more self storage facilities in the US than all 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 the history of self storage development, with over 295M square feet of self storage space coming online across the nation — or about 20% of the total existing inventory in the US — per Yardi Matrix data.

The self storage industry is closely related to life events and socio-economic factors: Moving, home improvement, downsizing and changes in household composition are just some of the reasons why people turn to self storage. The needs created by these situations are major drivers of the self storage market. Add the recent apartment boom to the mix and you have the perfect context for a flourishing industry that’s poised for even more development. Both Dallas and New York, which saw the most apartments added to their local inventories in the last decade, also had the most self storage space delivered over the same time span.

As the renter cohort is swelling across all major US cities, we wanted to see where people have easy access to storage space as a way to enjoy living in uncluttered homes. To find out which places offer the best self storage options to apartment renters, we’ve researched both multifamily and self storage development trends in the 100 biggest US metros between 2011 and 2020.

Is self storage keeping up with urban renters’ space needs? Dallas & Houston march strong, yet NY is largely undersupplied, keeping pressure on rents

After a slow start at the beginning of the last decade, self storage construction boomed near the closing years of the decade, largely supported by consistent multifamily development. Both sectors peaked in 2018, when over 57M square feet of self storage came online and more than 353,500 units were delivered in one year. Even when apartment construction seemed to quieten down in the second half of the decade, self storage continued growing at a rapid pace as people prioritized location versus space in their apartment choices. Self storage consolidated itself as a way to enjoy living large even when apartment sizes are shrinking.

Even as the 2020 pandemic caused significant disruptions across all sectors of the economy, self storage emerged relatively unscathed. Demand came from both traditional and new sources, allowing the industry to see further development which eventually translated into more options for renters. Moving remained a strong driver of demand, with most urban centers seeing high renter mobility as many people searched for more favorable housing options, whether seeking respite in suburban settings or access to wider job markets in larger employment hubs. Additionally, many employers who had to re-arrange office or restaurant space to allow physical distancing have created new demand for self storage, in addition to displaced students and newbie RV lifestyle enthusiasts who embraced this way to enjoy vacations amid pandemic restrictions.

Fast-growing Dallas-Fort Worth tops efforts to respond to growing housing and self storage needs

Some of the most in-demand metros have naturally seen the largest apartment and self storage space additions. Over the past decade, the Dallas population grew by 1.2 million people, per U.S. Census data, attracted by the numerous job opportunities. But more than a solid employment market, D-FW also features a balanced cost of living paired with 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 of smaller size than historical trends. In fact, among the largest Texan cities, Dallas lost the most apartment space over the last decade. This has only fueled further self storage development, with D-FW having seen the addition of more than 16.2M square feet of self storage during 2011-2020 – more than any other US metro in terms of overall volumes.

The New York metropolitan area has always been a hot market both for apartment and self storage construction, mainly supported by the high mobility of its people. In fact, 2011-2020 saw the addition of over 140,000 apartments to the New York inventory, the second-biggest number of new apartments in the country for the decade.

The Big Apple might be fast on track to build new housing, but much like Dallas, building more often means building smaller. The need for extra space becomes apparent in the case of NY as well, with developers boosting self storage construction efforts. Consequently, over 15.7M square feet of self storage space were built in New York between 2011-2020, the second-highest self storage construction volume in the US during that period. Anecdotally, the market does not seem to keep up with population growth. And despite its historically high level of deliveries, the self storage market is heavily undersupplied, with only 3.3 square feet per capita, below the national benchmark of 7 square feet per person. Supported by strong demand, self storage rents in New York are some of the most expensive in the nation. The average street rate for a self storage unit in New York is now $185/month, with only San Francisco, Los Angeles and Honolulu displaying higher rents.

Houston, on the other hand, which features approx. 10.8 sq. ft. of self storage space per capita, has much lower street rates. A standard storage unit in Houston now goes for $86. Houston has added no less than 14M square feet of self storage space over the last decade, the third-biggest self storage space volume increase in the US.

Top Metros for Self Storage and Multifamily Construction Volumes (2011-2020)

Rank	Metro	Self Storage Construction 2011-2020 (sq. ft.)	% of 2010 Self Storage Inventory	Multifamily Construction 2011-2020 (no. of units)	% of 2010 Multifamily Inventory
1	Dallas , TX	16,242,954	33%	173,244	28.20%
2	New York , NY	15,796,362	33.60%	141,522	16.40%
3	Houston , TX	14,075,185	28%	125,348	23.30%
4	Chicago , IL	11,257,475	31%	65,011	22.10%
5	Phoenix , AZ	8,738,034	35.10%	58,066	22.20%
6	Atlanta , GA	8,187,200	27.80%	78,958	21%
7	Miami , FL	8,091,832	26.70%	88,811	40.30%
8	Denver , CO	6,491,082	49.70%	72,544	41.80%
9	Austin , TX	6,489,638	51.80%	83,904	49.70%
10	Washington , DC	6,297,078	28.30%	117,509	27.20%
11	Minneapolis , MN	5,674,239	43.30%	49,125	30.30%
12	Seattle , WA	5,441,886	27.80%	93,200	43.60%
13	San Antonio , TX	5,419,951	37.50%	53,223	34.60%
14	Boston , MA	5,348,917	36.10%	55,029	33.20%
15	Los Angeles , CA	5,135,506	9.30%	102,623	20%
16	Charlotte , NC	5,082,557	37.70%	53,913	42.30%
17	Tampa , FL	5,037,245	29.60%	40,352	24.90%
18	Orlando , FL	4,702,095	33.40%	49,716	31.80%
19	Portland , OR	4,269,047	39.70%	38,626	31.30%
20	Philadelphia , PA	4,035,878	20.50%	40,796	15.60%
21	Milwaukee , WI	4,025,721	68.80%	14,731	22.80%
22	Nashville , TN	3,482,968	36.70%	39,504	39.70%
23	Oklahoma City , OK	3,449,865	30.70%	14,181	18%
24	Raleigh , NC	3,358,777	46.10%	32,021	41.70%
25	Baltimore, MD	3,324,039	33.10%	31,237	16.90%
26	Indianapolis , IN	3,179,333	28.40%	23,283	16.90%
27	Saint Louis , MO	3,010,429	27.60%	16,237	14.70%
28	Louisville , KY	2,716,592	47.40%	13,575	22%
29	Pittsburgh , PA	2,516,662	29.70%	12,813	16.20%
30	Detroit , MI	2,458,689	14.30%	8,691	4.10%
31	Kansas City , MO	2,386,355	21.20%	25,309	20.20%
32	Charleston , SC	2,316,750	49.70%	21,071	58.10%
33	Columbus , OH	2,310,437	25%	36,335	25.50%
34	Virginia Beach , VA	2,235,925	16.60%	18,551	16.40%
35	Richmond , VA	2,228,972	32.20%	14,407	17.90%
36	Jacksonville , FL	2,217,104	21.10%	18,798	21.60%
37	Omaha , NE	2,133,194	44.40%	10,243	19.40%
38	Greenville , SC	2,118,683	45.80%	10,897	30.80%
39	San Diego , CA	2,101,691	13.20%	31,791	19.80%
40	Boise, ID	2,071,527	26.70%	7,708	57.40%
41	Sacramento , CA	2,050,797	13.30%	10,169	8.30%
42	Cincinnati , OH	2,016,182	23%	15,413	15.60%
43	Salt Lake City , UT	2,016,167	27.80%	23,843	49.60%
44	Las Vegas , NV	1,890,498	11.90%	21,649	13.90%
45	North Port , FL	1,705,340	35.40%	9,344	42.40%
46	San Jose , CA	1,703,750	21.40%	29,410	29.50%
47	New Orleans , LA	1,514,770	20.60%	9,600	19.60%
48	Provo , UT	1,512,752	37.50%	7,183	119.10%
49	Cleveland , OH	1,461,660	21.20%	10,490	9%
50	Tulsa , OK	1,400,848	18.30%	8,319	14.80%
51	Colorado Springs , CO	1,391,947	27.50%	7,113	21%
52	Columbia , SC	1,337,607	29.80%	6,820	17.50%
53	Memphis , TN	1,321,882	15.60%	7,850	8.50%
54	Durham , NC	1,317,391	48.20%	12,525	30.60%
55	Cape Coral , FL	1,305,568	27.70%	8,141	50.80%
56	Providence , RI	1,286,463	26.90%	4,107	8.50%
57	Greensboro , NC	1,260,676	35.70%	7,491	18.30%
58	Grand Rapids , MI	1,252,099	35.20%	5,427	13.30%
59	Des Moines , IA	1,242,541	50.90%	12,694	43.80%
60	San Francisco , CA	1,221,813	5.80%	45,201	25.10%
61	Knoxville , TN	1,218,616	32.60%	6,698	19.90%
62	Rochester , NY	1,183,372	46%	6,028	11.20%
63	Augusta , GA	1,163,727	33.40%	5,127	24.20%
64	Riverside , CA	1,139,442	3.70%	17,024	12.20%
65	Dayton , OH	1,049,261	25.20%	3,568	8.50%
66	El Paso , TX	1,004,490	29.30%	7,832	20.60%
67	Albany , NY	980,002	30.40%	10,289	26.10%
68	Madison , WI	929,674	50.30%	13,672	39.90%
69	Spokane , WA	913,540	23.20%	5,772	25.10%
70	Worcester , MA	911,497	34.70%	2,870	14%
71	Chattanooga , TN	906,047	31.50%	5,957	31%
72	Palm Bay , FL	901,202	19.70%	2,995	16.20%
73	Buffalo , NY	895,698	29.30%	5,332	13%
74	Winston Salem , NC	887,747	34.70%	5,309	19.80%
75	Little Rock , AR	881,339	16.40%	7,270	18.10%
76	New Haven , CT	873,821	31.70%	3,507	11.30%
77	Birmingham , AL	868,625	15%	5,830	11.80%
78	Ogden , UT	850,846	13.90%	5,686	45.90%
79	Bridgeport , CT	821,281	28.70%	10,171	48.30%
80	Hartford , CT	805,952	18.50%	6,120	12.80%
81	Deltona , FL	804,448	20.30%	4,793	25.40%
82	Baton Rouge , LA	794,999	12%	7,305	20.40%
83	Wichita , KS	747,835	24.80%	3,081	10.40%
84	Albuquerque , NM	703,299	11.70%	5,651	13%
85	Tucson , AZ	678,803	11.30%	7,227	11.90%
86	McAllen , TX	646,240	22.10%	3,705	31.50%
87	Toledo , OH	626,454	24.90%	3,239	9.30%
88	Bakersfield , CA	566,010	9.70%	2,198	12.20%
89	Springfield , MA	527,777	34.40%	584	2.50%
90	Syracuse , NY	523,106	26.40%	3,310	12%
91	Lakeland , FL	509,744	13.20%	3,191	17.50%
92	Oxnard , CA	419,673	8.10%	4,392	17.60%
93	Allentown , PA	401,269	15.20%	4,064	15.20%
94	Harrisburg , PA	359,992	18.80%	4,058	16%
95	Akron , OH	334,637	11.60%	2,596	7.90%
96	Fresno , CA	319,214	5.30%	3,961	8.90%
97	Stockton , CA	219,210	4.40%	2,020	11.40%
98	Poughkeepsie , NY	158,620	4.90%	2,166	11.20%
99	Honolulu , HI	108,982	4.70%	3,528	19.40%
100	Jackson , MS	33,966	0.80%	1,281	4.50%

Source: RentCafe analysis of U.S. Census Bureau and Yardi Matrix data Note: Figures referencing self storage construction are expressed in square feet.

 

Washington, DC is known for its big-city entertainment options and ample career opportunities – including a competitive average wage that ranges around $77,200, up 23% over the decade – which all provide the perfect mix for a desirable lifestyle. It’s easy to see why in the past 10 years, more than 630K people made the D.C. metro region their home. Roughly 117,500 apartment units have been added to the local market, the fourth-largest jump in the supply of any large US metro seen between 2011-2020. Consequently, self storage options have grown and diversified as well, with new facilities popping up across the metro area. No less than 77 self storage facilities offering a total of 6.2M square feet, have been delivered in the same 10-year period.

Living in or around LA doesn’t come cheap, even with a growing income (the average wage, now at $63,660/year, is up 24% over 2011-2020), but the shiny Cali lifestyle is still coveted by many across the US. Over 385,900 people became Angelinos in the past decade, spurring residential construction which eventually resulted in the addition of over 100,600 apartment units. On the self storage front, we saw the addition of about 5.1M square feet of self storage space for the same time period. Despite this impressive level of self storage construction, LA is another undersupplied market, with only 4.5 square feet of storage space per capita, well below the national average. Both restrictive zoning regulations and land availability have put the brakes on self storage development in LA, which resulted in higher rent rates. An average self storage unit in LA now rents for $193/month.

With its tax-free status, cosmopolitan atmosphere and round-the-clock gorgeous weather, you can see why over 600,000 people moved to the Miami metropolitan area over the past decade. But have these newcomers had their space needs met? Miami in fact saw the delivery of over 88,800 units between 2011 and 2020. The local self storage sector responded well to this elevated level of construction, seeing its inventory swell by over 8M square feet of rentable space during the last decade.

Southern charm may still be drawing people to Atlanta but it’s mostly the metro’s employment opportunities that encouraged the massive residential development over the past decade. The impetus from the booming apartment market spilled into the self storage sector too. The Atlanta metro area added over 8.1M square feet of self storage space, making it the sixth-most active self storage market during the decade. The development trend continues in ATL as more than 1.3M square feet of storage space are planned to be delivered in 2021.

Milwaukee and Austin see most impressive inventory changes over the last decade

Not all metros have started from the same point regarding the dynamics of demand and supply in the self storage sector. Some were heavily undersupplied at the beginning of the decade, but as local needs for space amplified considerably, developers responded with intensified construction efforts.

Metro Milwaukee’s self storage stock grew by a massive 68% in the last 10 years, giving residents access to approx. 4 million sq. ft. of extra storage space. The city of Milwaukee is home to the biggest chunk of the metro’s new supply for the decade, 31% or 1.2M square feet of storage space. The apartment sector has also grown, with approx. 14,700 apartments delivered over the last decade. Sustained by a cost of living 10% lower than the US average, and a diverse job market anchored by healthcare, manufacturing and water technology employment opportunities, Milwaukee has in fact evolved into a great place to live. In fact, it’s now the 15th most popular relocation destination for renters, with people flowing in from across the US, including Chicago, IL, and Anchorage, AK.

Generally one of the hottest markets for self storage, and also a popular relocation destination, Austin has continued to expand its stock – by as much as 51% of 2010’s existing inventory, with over 6.4M square feet of storage space coming online during the past decade. The bulk of the self storage activity over the last ten years occurred within Austin’s city limits (49%, which is more than 3.1M square feet). Apartment construction was also prolific, as Austin added about 84,000 apartments during that time, equal to almost half 2010’s inventory. The uptick in both self storage and apartment construction was sustained by the almost 30% growth in population — the largest share of newcomers compared to 2010 populations among the top 100 metros. More than 500,000 people became Austinites over the course of the last decade. In addition to a varied housing market, Austin gets high marks for affordability, job growth and thriving tech scene.

Another urban center that’s seen significant development in the last decade, the Charleston, SC, metro area has seen its population grow by 20% since 2010. Demand for self storage went up, spurring development activity. In fact, the area has witnessed an expansion of 49% of its 2010 inventory that resulted in the addition of 2.3M square feet of storage space. Unlike other metros that saw their main city hog most of the self storage construction, Charleston is an outlier – nearby Summerville brought in the most storage space over the decade, with 24% of the metro’s construction (or 555,670 square feet) going on within that city’s limits.

Provo, UT, has also grown by leaps and bounds, with the metro creating the kind of opportunities people most value, including job growth and wage gains that earned it the title of best-performing city in the US. Determined to capitalize on the growing demand, developers accelerated construction activity, increasing the local inventory by 37% (or about 1.5M square feet of storage space) in the last decade. The apartment market outperformed self storage development, with Provo seeing the highest growth of multifamily deliveries. More than 7,000 new apartments in 50+ unit buildings were delivered over the last 10 years, an expansion of approx. 120% compared to 2010 stock levels.

Las Vegas sees highest street rate hike, with NYC, LA and San Francisco following close behind

Extensive construction generally brings street rates down, which holds true for many metros where overflowing inventories more than meet demand, making an inexpensive service such as self storage even more affordable. However, some metros have upped their rent rates, even amid intensified construction activity, a sign that the socio-economic picture is changing more rapidly than anticipated. The Las Vegas metro for one has shifted from simply a tourist-centric destination to a place where people are looking to settle down. With more than 315,000 people moving in over the last decade, interest in self storage soared exponentially. As a result, the Las Vegas metro area leads self storage rent growth across the US with a 27% street rate hike in the last 5-year cycle. A standard self storage unit now rents for $112/month.

Self Storage Street Rates Changes (2021 vs. 2017)

Rank	Metro	Self Storage Street Rate 2021	Self Storage Street Rate 2017	Street rate difference 2017-2021 (%)	Self Storage/ Capita (sq. ft.)
1	Honolulu, HI	$260	$237	10%	2.5
2	San Francisco, CA	$208	$194	8%	4.7
3	Los Angeles, CA	$193	$178	9%	4.5
4	New York, NY	$185	$167	11%	3.3
5	San Jose, CA	$177	$184	-4%	4.8
6	Oxnard, CA	$172	$154	12%	6.7
7	San Diego, CA	$163	$153	6%	5.4
8	Bridgeport, CT	$157	$150	5%	3.9
9	Seattle, WA	$156	$144	8%	6.3
10	Boston, MA	$146	$147	0%	4.1
11	Washington, DC	$145	$144	0%	4.5
12	Poughkeepsie, NY	$147	$132	11%	5
13	Miami, FL	$140	$141	-1%	6.2
14	Portland, OR	$141	$156	-9%	6
15	Sacramento, CA	$136	$131	4%	7.4
16	Providence, RI	$130	$128	2%	3.7
17	Philadelphia, PA	$130	$120	9%	3.9
18	Baltimore, MD	$128	$129	-1%	4.8
19	Worcester, MA	$122	$132	-8%	3.7
20	New Haven, CT	$124	$121	3%	4.2
21	Stockton, CA	$123	$116	7%	6.8
22	Riverside, CA	$121	$103	18%	6.8
23	Deltona, FL	$122	$108	13%	7.1
24	North Port, FL	$120	$116	4%	7.8
25	Springfield, MA	$120	$111	8%	3
26	Denver, CO	$117	$129	-9%	6.6
27	Allentown, PA	$116	$108	7%	3.6
28	New Orleans, LA	$116	$96	21%	7
29	Las Vegas, NV	$112	$88	27%	7.8
30	Palm Bay, FL	$113	$110	3%	9.1
31	Tampa, FL	$110	$117	-7%	6.9
32	Phoenix, AZ	$109	$97	12%	6.8
33	Syracuse, NY	$110	$106	4%	3.9
34	Buffalo, NY	$111	$94	17%	3.5
35	Pittsburgh, PA	$111	$122	-9%	4.7
36	Colorado Springs, CO	$107	$100	6%	8.7
37	Chicago, IL	$103	$104	-1%	5
38	Detroit, MI	$108	$103	5%	4.6
39	Hartford, CT	$103	$96	7%	4.3
40	Minneapolis, MN	$106	$111	-4%	5.2
41	Spokane, WA	$106	$100	7%	8.5
42	Rochester, NY	$107	$104	2%	3.5
43	Harrisburg, PA	$103	$110	-6%	3.9
44	Salt Lake City, UT	$104	$99	4%	7.5
45	Orlando, FL	$100	$101	-1%	7.2
46	Cape Coral, FL	$101	$112	-9%	7.8
47	Tucson, AZ	$102	$87	18%	6.4
48	Fresno, CA	$103			6.4
49	Cleveland, OH	$102	$100	2%	4.1
50	Austin, TX	$99	$103	-4%	8.5
51	Richmond, VA	$98	$105	-6%	7.1
52	Nashville, TN	$100	$114	-12%	6.7
53	Jacksonville, FL	$99	$93	7%	8.2
54	Virginia Beach, VA	$99	$87	14%	8.9
55	Atlanta, GA	$97	$98	-1%	6.2
56	San Antonio, TX	$98	$103	-5%	7.8
57	Albany, NY	$99	$100	-1%	4.8
58	Knoxville, TN	$96	$91	5%	5.7
59	Dallas, TX	$94	$103	-9%	8.6
60	Durham, NC	$96	$104	-8%	6.3
61	Albuquerque, NM	$92	$90	3%	7.3
62	Kansas City, MO	$94	$95	-1%	6.3
63	Charleston, SC	$93	$111	-16%	8.7
64	Birmingham, AL	$92	$89	4%	6.1
65	Cincinnati, OH	$91	$87	4%	4.8
66	Baton Rouge, LA	$95	$91	5%	8.7
67	Saint Louis, MO	$90	$108	-17%	5
68	Boise City, ID	$91	$83	10%	13.1
69	Ogden, UT	$91	$76	19%	10.2
70	Grand Rapids, MI	$89	$98	-10%	4.5
71	Lakeland, FL	$91	$88	4%	6
72	Winston-Salem, NC	$86	$80	8%	5.1
73	Milwaukee, WI	$89	$101	-12%	6.3
74	Columbia, SC	$84	$84	0%	6.9
75	Akron, OH	$86	$79	9%	4.6
76	Columbus, OH	$87	$79	10%	5.4
77	Provo, UT	$85	$95	-10%	8.6
78	Louisville, KY	$87	$95	-8%	6.7
79	Memphis, TN	$84	$81	4%	7.3
80	Charlotte, NC	$86	$96	-11%	7
81	Houston, TX	$86	$95	-9%	9.1
82	Madison, WI	$87	$81	8%	4.2
83	El Paso, TX	$85	$73	17%	5.3
84	Raleigh, NC	$86	$98	-12%	7.6
85	Augusta, GA	$86	$77	13%	7.6
86	Jackson, MS	$85	$70	22%	7
87	Indianapolis, IN	$83	$82	1%	6.9
88	Des Moines, IA	$84	$95	-12%	5.3
89	Dayton, OH	$83	$80	5%	6.4
90	Chattanooga, TN	$81	$92	-12%	6.7
91	Omaha, NE	$81	$79	2%	7.3
92	Greensboro, NC	$78	$72	8%	6.2
93	Wichita, KS	$79	$72	9%	5.9
94	McAllen, TX	$79	$71	11%	4.1
95	Bakersfield, CA	$78	$67	15%	7.1
96	Little Rock, AR	$73	$62	18%	8.4
97	Greenville, SC	$73	$80	-9%	7.3
98	Toledo, OH	$74	$83	-11%	4.9
99	Tulsa, OK	$72	$77	-6%	9.1
100	Oklahoma City, OK	$68	$73	-7%	10.4

Source: RentCafe analysis of U.S. Census Bureau and Yardi Matrix data
Note: The average self storage street rate is for a 10x10 non-climate controlled storage unit.

Rent growth also occurred in the expensive, larger markets as a result of undersupply. The New York metro area saw an 11% street rate increase relative to 2017, with self storage rents currently averaging $185/month. The Honolulu and LA metro areas saw 10% and 9% hikes, respectively, for the same time frame. Incidentally, Honolulu emerges as the most expensive market for 2021, with an average street rate of $260/month, with LA coming in as the third-most expensive, reporting a $193/month charge for the same service, but surpassed by San Francisco which came in second with a street rate of $208/month.

At the other end of the spectrum, some metros turned into renters’ markets. Seeing its local inventory swell by 27%, St. Louis experienced the most significant street rate decline, down 17% since 2017 — bringing the local street rates to $90/month in 2021. The Charleston and Milwaukee metros, which saw some of the most significant growth in self storage inventory, have witnessed their street rates moving downwards. Rents declined 16% in Charleston ($93/month) and 12% in Milwaukee ($89/month) over the last 5 years.

Bracketed by two recessions, the self storage industry not only kept afloat during the last decade, but it experienced a remarkable development boom that reflects its relevance in responding to people’s needs. If the decade we just left behind is any indication, we can expect the new one to reveal, once again, the resilient and adaptive nature of the self storage sector. While construction in 2021 still faces uncertainty, the self storage industry has emerged from the unprecedented volatility of 2020, and it might now be contemplating a much more positive outlook, especially as it will still continue to assist people during various circumstances of transition or settling down.

Seeing that the economy is on a recovery trajectory, the self storage sector is estimated to deliver about 765 self storage facilities in 2021, amounting to over 56M square feet of storage space.

What the experts are saying

Doug Ressler, Business Intelligence Manager at Yardi Matrix

Do you think self storage development has mirrored the pace of multifamily construction in the past decade?

Self storage has a mixed customer base, largely split between renters, homeowners and businesses. Over the last decade, apartment footprints have been getting smaller as developers tried to respond to the growing need for more housing units, with the multifamily sector increasingly creating more need for extra space. Traditionally, migration has been towards jobs and dense urban areas with renters prioritizing location and lifestyle amenities over living space. Self storage filled in that lack of living space by providing storage options away from home – but still close enough to be convenient. From an affordability standpoint, self storage is also privileged as it positions itself as the better and cheaper option compared to renting another bedroom or purchasing a larger home.

What are the main factors that underpinned self storage’s recent growth?

Self storage is driven by both economic and demographic factors. The health crisis only exacerbated demographic shifts. Last year’s economic uncertainty and employers’ sending staff home to work remotely contributed to an acceleration of demographic changes that were already underway. The need to work from home and attend school online added to the already shrinking apartment footage and generated demand for extra space away from home. Through Q4 2020 and Q1 2021, many of the moves were towards more affordable, smaller housing or consolidated households, which meant less storage space in the housing units. These trends have supported strong market performance which contributed to increased operator and developer confidence.

How do you see the self storage industry moving forward?

Vaccine distribution has a critical role in economic outlook, with signs of recovery already visible. The nation’s economic situation is regaining much of the momentum lost last spring as it continues along an upward path in 2021. Markets with robust in-migration and household formation are demonstrating robust self storage growth with significant square footage constructed and positive occupancy in Texas as well as Midwest markets, Phoenix and Atlanta.

The anticipated return to the office will most likely favor self storage. As restrictions start to get lifted and people get back to work, we can expect to see greater storage demand especially in urban centers like San Francisco and New York city as renters maximize residency in smaller units, which will create a greater need for separate storage facilities.

Alan Tidwell, Associate Professor of Finance, University of Alabama, Culverhouse College of Business, Department of Economics, Finance and Legal Studies

What factors made the self storage industry soar in the past decade?

It was primarily an increase in apartments that boosted self storage construction. For example, multi-family units with 5 or more units increased from about 184,000 units per year in 2011 to an average of about 440,000 units per year from 2015 – 2020.

Do you see a trend of parallel growth for self storage and multifamily sectors in the future?

Looking at apartment and self storage historic annual REIT returns, they have a correlation of about 80% over the last 27 years. This suggests a contemporary positive link between apartment and self storage returns. I would expect this positive relationship to continue.

In which direction do you think the self storage industry is headed?

There are too many variables to access, from the pandemic driving people to single family houses to undersupplied single-family inventories. Consequently, house prices are going up quickly, leading to affordability issues. Currently, there is a lot of multifamily construction, which means self storage construction is also expected to grow.

Meagan McCollum, Chapman Assistant Professor of Finance, The University of Tulsa

What factors made the self storage industry soar in the past decade?

The self storage industry benefited in the early 2010s from the after effects of the Great Recession. The industry also benefited from an inflow of investment capital as this sector grew more professionalized and cohesive.

Do you think self storage development has mirrored the pace of multifamily construction in the past decade?

Self storage and multi-family demand don’t perfectly track together, but there are some similarities. In both sectors, there’s been a trend of consolidation into more concentrated ownership groups for existing stock as well as “upscaling” in new development. Much of the new stock in both self storage and multi-family in the past decade has been on the high end. Supply of luxury multi-family as well higher-end self storage has greatly outpaced the growth in supply of workforce multi-family housing and no-frills self storage.

Do you see a trend of parallel growth for self storage and multifamily sectors in the future?

Although there is some precedent for parallel growth in these sectors in the future, growing together will depend on what future new multi-family development looks like. If the per-unit footprint on new development is relatively small, this obviously would be a growth opportunity in self-storage, but if new multifamily units’ average square footage grows, the opposite would be true. However, I believe that there is an opportunity for multi-family developers in some locations to build with more expansive on-site self storage options, offering another source of cash-flow potential to investors in this sector.

In which direction do you think the self storage industry is headed?

Outside of the multi-family demand discussed above, as demographics change, many baby boomers with current large housing footprints could generate a good bit of self storage demand in the near future for themselves or their heirs. Also, as workplaces continue to re-evaluate their office space post-pandemic, businesses will likely gain importance as demand drivers in the self-storage industry. Tech has the potential to be disruptive in this historically low-tech sector as innovations in delivery and retrieval of stored items can provide additional value to customers. Of course, the possibility for overdevelopment remains important to consider, especially as development costs for self-storage remain relatively low as compared to other sectors, but, overall, I believe there is substantial future growth potential in self storage.

Methodology

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

To compile this report, we analyzed self storage and multifamily construction across the largest 100 US metros by population. Apartment data is related to rental units in 50+-unit buildings.

The Bronx and Staten Island were not included in the New York data set reflecting apartment development due to low sample size.

The data on multifamily and self storage was taken from Yardi Matrix, RentCafe‘s sister division and 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.

Data on population, which we used to determine the biggest 100 cities, comes from the latest U.S. Census Bureau estimates. Additionally, we turned to the Bureau of Labor Statistics to extract data on the average wage. The decade-over-decade wage increases were not adjusted for inflation.

Fair use and redistribution

This study serves as a resource for the general public on issues of common interest and should not be regarded as investment advice. The data is true to the best of our knowledge but may change if amendments to it are made. We agree to the distribution of this content but we do require a link in return for attribution purposes pointing to RentCafe.com or this page.