Self Storage Rents Drop in Three Quarters of US Cities but Decreases Are Moderating

• Self storage street rates in March 2023 decreased nationwide by 2.3% year-over-year, and now hover at an average of $127 per month
• Around three quarters of cities saw year-over-year street rate declines, with New Orleans experiencing the highest at -17%
• 18% of the US’s largest cities saw rent increases, with Newark, NJ, Arlington, VA, and Bakersfield, CA, in the lead
• Orlando, FL, and Las Vegas, NV, have the highest storage inventory increases planned for 2023, at 811K and 667K square feet, respectively

The average monthly rent for a standard 10’x10’ storage unit across the nation was $127 in March 2023. While this street rate is up slightly from the previous month, it is still down -2.3% from a year before. Among the U.S.’s 150 largest cities, 73.3% saw year-over-year declines in the average street rate for a standard storage unit.

“Despite street rates registering a year-over-year decline again in March 2023, seen sequentially, they remain reasonably steady,” Doug Ressler, business intelligence manager at Yardi Matrix, told us. “In fact, rents on some unit sizes and types are rising month-over-month. Moreover, investor sentiment is positive overall, with transaction activity remaining steady in 2022 even after a record-setting 2021.”

The heightened construction activity that saw most cities amplify storage inventories, coupled with seasonality, have had a downward effect on rents. However, as we head into the peak moving season, when storage is very much in demand, we expect these drops to temper down.

Cities with large storage rent drops have high inventories, increased competition or declining populations

A number of diverse factors contributed to the highest rent decreases in March 2023. For example, in a city with a declining population, storage providers may find their customer base shrinking. Large storage inventories can also encourage a continued easing of rents due to market saturation. In up-and-coming cities, the motivation to develop storage is high, but the competition this inevitably generates can also impact street rates.

Self storage rates in New Orleans, LA, had the steepest year-over-year drop in March 2023 – 16.8%.  The population losses and fewer home sales recorded in NOLA last year resulted in less activity on the self storage front as well. No new deliveries were seen in New Orleans in 2022 and street rates have been trending down for much of last year. In March 2023, street rates were $129, up 0.8% from February but still considerably down from a year before.

A similar situation is seen in Atlanta, GA, where the population fell by more than 1% in a year and the home sales market experienced a slowdown in 2022. Storage street rates in Atlanta are now $119, down 9% year-over-year.

Some well-regarded cities already built large storage inventories, which can put downward pressure on rents. Jacksonville, FL, offered a very generous 9.5 square feet per person at the close of 2022 and saw its average street rate drop 9% year-over-year. Stockton, CA, also has a healthy inventory of more than six square feet per capita which tends to temper down rents.

Gilbert, AZ has seen increased self storage construction activity which may in fact be responsible for the rent decreases. The local storage inventory is scheduled to increase by 8% in 2023 after also having expanded last year by more than 110K sq. ft. Competition in the encompassing, and very storage-friendly, Metro Phoenix area may have put pressure on street rates here. A storage unit in Gilbert now rents for $117, down 8.6% y-o-y.

Supported by low inventories and strong demand, storage rates grew most in Newark, NJ, and Arlington, VA

A city’s low storage inventory will always encourage investors to consider it as a viable option for expansion plans. This is also the case when it is forecast to have a strong future in terms of both economics and incoming migration.

As with the cities having the highest year-over-year self storage street rate drops in March 2023, those with increases are found spread across the country. Particularly prominent in the list, however, are places from which workers in larger cities commute.

Newark, NJ, an important feeder city for New York, heads the list of cities with rising rents, 11% year over year. The local storage inventory is very tight here and the modest increases in square footage made in 2022 and planned for this year will not alleviate the situation drastically. The very rapid growth of the city, currently 8.6% annually, may put added pressure on the storage sector, keeping rates high.

Arlington, VA, also has very low self storage provision and customers experienced one of the nation’s largest rent discounts in March 2023 since a year previously, $18. Local storage needs are magnified not only by the city's status as a favored home for DC commuters, plus a job market soon to be boosted by Amazon's new headquarters, but also the fact that a high 21% of residents work from home here. Arlington does not plan to add more storage space this year, which may mean rates continue on their current trajectory.

Just down the road from Seattle, WA,, with its top high-tech employment market and famous attractions, Tacoma increased its average street rate by 4% year-over-year. It also appreciated by commuters, having more affordable costs of living compared to its larger neighbor — its average storage rent of $156 is considerably less than in the Emerald City,

Some cities with greatly increasing storage rents had a low street rate to start with. The storage sector in Bakersfield, CA, with an average storage rent of just $88, can take rent increases in its stride. And with the city’s population expanding at 5% a year, rates may well continue on their upward path.

Residents of Anchorage, AK, have special requirements for storage in their northerly climate, and will be seeing their local inventory grow by 10% this year. Lexington, KY, has also been demonstrating particularly strong enthusiasm for developing storage space, and will not only be increasing its inventory by 17% this year but also added square footage approaching that amount in the years of 2020 and 2021 combined. The elevated rents in these places inspire investor confidence.

Orlando and Las Vegas still lead cities with highest projected 2023 self storage additions

It is expected that the US self storage sector as a whole will add 52.6M sq. ft. in 2023. The leading city in this regard is Orlando, FL, with over 800K square feet on the drawing board. Both the city of Las Vegas and North Las Vegas feature strongly and Henderson is just outside the top 20, making a huge combined total of around 1.3M square feet for the Las Vegas Valley.

Phoenix, AZ, plans to add to its already huge self storage inventory. As a magnet for businesses and with a growing population, the city is also building plenty of apartments these days, something which tends to go hand in hand with developing self storage — Philadelphia has in fact been building storage more rapidly than multifamily housing.

California still has most entries in top 20 of cities with greatly increasing self storage inventories

The list of places adding the most self storage in 2023 as a proportion of their inventories is headed by California’s Elk Grove — this city has, at times in recent years, been the fastest-growing in the US, and is projected to double its inventory to more than a million square feet of space. Santa Clarita is now increasing more rapidly in terms of population, by almost 7% annually, and will grow its storage square footage by almost a quarter in 2023.

The New York City self storage sector has traditionally been undersupplied. In response, the Staten Island and Manhattan self storage sectors in particular have a lot of new space projected for 2023 — the former will increase its storage inventory by a fifth.

Additions to storage inventory will be particularly welcome in the Aurora, IL, and Worcester, MA, where provision is only around 2.5 square feet per capita — in contrast to the former’s current decline, the latter is the only US city whose annual population increase is in double figures right now. The very high storage provision of Tallahassee, FL, matches state capital Jacksonville’s, indicating enthusiasm for the service in the Sunshine State continuing strongly.

Check out the full list of the 150 cities complete with key statistics about local rent and projected supply data:

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 March 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.

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

For data on the share of working-from-home employees we turned to the U.S. Census (2021 data set).

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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