Amid Intense Development Activity, Self Storage Rents Cool Off

• Self storage prices decreased by 3.1% year-over-year, now hovering at $126 per month
• About 70% of the largest cities saw price declines, with New Orleans, LA, experiencing the highest street rate drop, currently at 19% year-over-year
• 52M square feet of self storage are slated for delivery in 2023, with Orlando, FL, coming in first for new supply

The consistently high new supply levels seen by the self storage market over the last few years have created a context for rental rates to cool down. The average national price for a standard 10’x10’ storage unit decreased by 3.1% year-over-year in February 2023 and now sits at $126 per month. On a month-by-month basis, street rates remained unchanged.

National self storage rents cool off, with New Orleans, LA, experiencing the steepest rent drop

Self storage rent growth has tempered across the U.S. in recent months. In fact, street rates dropped in roughly 70% of the 150 largest cities in the U.S., with two cities registering decreases in the double digits.

New Orleans, LA, shows the largest price drop — standing at 19% year-over-year — which brings the cost of a standard storage unit to $128 per month. The Louisiana city is closely followed by North Las Vegas, NV, (18%), where a storage unit rents for $105 per month. Ontario, CA (9.7%), registers the third-largest street rate decrease. Renting an Ontario, CA, storage unit can cost you around $149 per month.

Top 10 Cities With Highest Street Rate Drop

Rank	City	Rent Current Month	Y-O-Y	M-O-M
1	New Orleans, LA	$128	-19.0%	0.0%
2	North Las Vegas, NV	$105	-18.0%	1.9%
3	Ontario, CA	$149	-9.7%	-0.7%
4	Washington, DC	$154	-9.4%	1.3%
5	Las Vegas, NV	$120	-9.1%	0.0%
6	Jacksonville, FL	$110	-9.1%	0.0%
7	Henderson, NV	$126	-8.7%	-0.8%
8	San Bernardino, CA	$106	-8.6%	1.9%
9	Atlanta, GA	$140	-8.5%	0.0%
10	Glendale, AZ	$111	-8.3%	0.0%

*Non-climate-controlled 10'x10' storage units

Source: RentCafe analysis of Yardi Matrix data

 

The price decreases recorded in the first quarter of 2023 can be correlated with the strong development pace we’ve seen in the last few years. For instance, New Orleans added over 1M square feet of its inventory during the past five years.

The homebuying market has also been touched by several economic challenges in 2022, resulting in fewer sales and less moving activity, which typically supports self storage. However, mobility has been high on the apartment rental front, which compensated for the faltering demand from homeowners. Moreover, the industry’s seasonality during the cold weather also plays its part in the downward trend of self storage prices. However, with the spring moving season kicking in, self storage is entering its busy season. Self storage prospects may encounter more competitive markets as well as climbing rates in several sought-after relocation destinations.

Where are self storage rates increasing? Newark, NJ, leads the pack

While the self storage market is indeed slowing down, some places buck the national trend, driven in most cases by an imbalance between supply and demand. Naturally more factors come into play to support rent growth, including heavy migration, local home sizes, demographic specifics and spending habits, among other things.

Top 10 Cities for Street Rate Growth

Rank	City	Rent Current Month	Y-O-Y	M-O-M
1	Newark, NJ	$150	11.1%	2.7%
2	Bakersfield, CA	$89	9.9%	1.1%
3	Buffalo, NY	$129	7.5%	0.0%
4	Anchorage, AK	$193	6.6%	0.5%
5	Aurora, IL	$94	5.6%	-3.1%
6	Lexington, KY	$113	5.6%	0.9%
7	Tacoma, WA	$155	5.4%	0.6%
8	Fresno, CA	$117	4.5%	0.0%
9	Akron, OH	$95	4.4%	2.2%
10	Arlington, VA	$247	4.2%	-0.4%

*Non-climate-controlled 10'x10' storage units

Source: RentCafe analysis of Yardi Matrix data

Newark, NJ, the first city for annual street rate performance, has seen rents shoot up by 11.1% year-over-year. Newark sees a high influx of migration, with the last five years registering an 8% increase in population, based on U.S. Census data. High migration, coupled with a low inventory (0.9 sq. ft./person) put upward pressure on self storage prices as demand went up. Renting a self storage unit in Newark, NJ, costs $150 per month.

Bakersfield, CA, (9.9%), comes in second for street rate hikes. The city benefits from a healthy inventory of close to 5M square feet of self storage space, which translates to 8.9 square feet per capita. However, robust demand kept street rates on a climbing trajectory. A major contributing factor is population growth – the last five years have seen a 7% increase in Bakersfield residents. With no other major cities close by, the Bakersfield market is bound to respond to the existing demand. Over 101K square feet of self storage space is scheduled for delivery in 2023, which should help bring down the self storage rents. A Bakersfield, CA, self storage unit rents for $88 per month.

Orlando, FL and Las Vegas, NV expected to see the most new storage supply in 2023

There are currently over 1.7 billion square feet of self storage in the U.S, with more on the way. Moving, the main source of self storage demand, continues to fuel construction in 2023, alongside the need for more space at home. Over 30M people in the U.S. are projected to move this year. As a result, the self storage industry is responding by ramping up construction efforts. More than than 52M square feet of self storage space are scheduled to be delivered in 2023. Of the 150 cities included in our study, 98 of them have self storage projects under construction.

The most active development market by sheer volume is Orlando, FL, where over 810,000 square feet of storage space are being built in 2023. This is perhaps less of a surprise as Orlando’s spectacular population growth — 12.5% over the last five years — has prompted developers to ramp up construction.

Las Vegas, NV, with its attractive real estate market, has seen its numbers swell as well, with the population growing by 2.1% in the past five years. As a result, the city continues to respond to the robust self storage demand and is expected to add over 667,000 square feet of self storage in the current year, the second-largest construction volume on our list.

Philadelphia, PA, claims the third-highest projected supply numbers, with over 636,000 square feet of self storage to be delivered in 2023. The city already tallies a healthy 5.6M square feet of self storage, but with a significant share of the population working from home (10.8%), interest in self storage remains high. Moreover, the population went up 1.7% in the past five years, which also contributes to the city’s need for self storage.

Similarly, Elk Grove, CA, which saw its population increase by 5.6% in the last five years, is getting significant attention from self storage developers. Roughly 546,000 square feet of self storage space are set to hit the market by the end of 2023. That represents a whopping 50% of the existing inventory.

Cities with the fastest-growing self storage inventories are heavily undersupplied

Looking through the lens of self storage market growth in 2023, some of the best-performing places are small cities that are also undersupplied. When you factor in the local population, inventories per capita are much lower than the national average of seven square feet per person in most cities.

Elk Grove, CA, emerges as the fastest-growing city for projected construction, with 2023 deliveries expected to represent 50% of the total existing inventory. The city has only 3.7 square feet of self storage per person, a severely undersupplied market that’s going to benefit from the impressive construction hike this year.
Aurora, Illinois, emerges as the second-fastest-growing city for self storage development, with 2023 projections making up 36% of the overall inventory. With a low inventory of 2.4 square feet per person, the city is poised to see inventory expansion.

Santa Clarita, CA, comes in third for its scheduled self storage growth for 2023. Projected development for the current year represents 28% of the self storage tally at the end of 2022, or about 221,000 square feet of storage space. With a limited supply related to population (3.7 square feet per capita) and a population increase of 8.4% in the last five years, you have the right conditions for a booming self storage market.

On the East Coast, Worcester, MA, is another fast-growing city for self storage construction, with 2023 projections making up 22% of the stock delivered at the end of 2022. At 2.5 square feet per person, the new supply is a welcome addition, giving renters more options for quality storage space away from home.

The self storage industry continues to prove its resilience at the beginning of 2023. New construction seems to continue on an even keel for 2023, allowing prices to stay within reasonable levels for a comfortable storage experience.

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 February 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.

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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