Self Storage Rates Continue Negative Growth Trend, with Arizona’s Chandler and Tempe Seeing Double-Digit Drops

• National self storage rates experienced a 4.3% decrease this past February
• Chandler and Tempe, in Arizona, saw double-digit drops in self storage street rates
• Brownsville, Texas, on the other hand, registers the biggest self storage price increase, at 5.4%
• Los Angeles, California, tops the charts for 2024 expected construction
• However, 45% of the county’s biggest 150 cities do not plan to add new inventory this year

Self storage rates across the country are seeing price decreases for the 17^th month in a row now. The national average street rate is standing at $134 this February, representing a 4.3% drop year-over-year. The y-o-y price decrease rate accelerated compared to January, when it stopped at 3%.

The self storage sector is in the process of reconciling the fast-paced inventory expansion of the past few years with the new economic realities. These include the slowdown in home sales, one of the major demand drivers for the self storage sector, and Americans adopting a more conservative attitude toward spending due to inflation and uncertainty.

However, we are already seeing major changes in planned deliveries nationwide, with 45% of the 150 major cities in the country foregoing inventory expansions in 2024. In fact, the forecasted self storage construction for 2024 is 20% lower compared to 2023 deliveries. This creates the premises to further balance the excess inventory with the dwindling demand in different locations across the country.

Zooming in on price trends, about 88% of the country’s top 150 cities have registered self storage rate declines. The trend seems to affect medium-sized cities more, as all but one of the top 10 cities with the biggest price drops have a population of under 300K.

Yonkers, NY, makes an entry among cities with significant price decreases

Three cities in Arizona and another three in Florida are among the top 10 for self storage price decreases.

Chandler, AZ, takes the top spot, with the local street rates now at $116, representing a 12% year-over-year decline. Despite the city’s status as a relocation magnet and its remarkable 12% population growth from 2017 to 2022, the steep drop in prices can be attributed to recent changes in migration and home buying trends. However, the local self storage sector is rapidly adjusting to the market’s current conditions – no new deliveries are forecasted for 2024.

Tempe, AZ, is facing the same types of challenges. The market rate for a self storage unit in Tempe amounted to $118 this February, signifying a double-digit, almost 11% year-over-year decrease. Conversely, new self storage supply in Tempe is not forecasted for the current year.

The third Arizonan city showing up among the top 10 cities is Gilbert. The rent for a self storage unit in Gilbert, AZ, at $121 this February, registered a 9.8% y-o-y drop. Even so, the local sector’s outlook on the industry remains positive, with almost 110K square feet of new self storage space forecasted to be delivered this year.

Yonkers, NY, is a recent addition to cities experiencing significant price corrections, ranking third with a 9.9% y-o-y decline. Currently, the cost of renting a unit in Yonkers, NY, hovers around $192, well above the national average. Despite the recent acceleration of price decreases in Yonkers, this core suburb of NYC bets on continued demand for self storage and takes steps to expand the local inventory, now amounting to a modest 2 square feet of space per capita. An additional 68K square feet of space are expected to be delivered here in 2024.

Oakland and Oxnard, both in California, are two other new entries among the cities with the highest self storage price declines. The rent for a storage unit in Oakland, CA, now stands at $195, which translates to an 8.5% y-o-y decrease. However, the month-to-month price evolution shows signs of price stabilization, with the February 2024 rent half a percentage point higher than in January. Oxnard follows the same trajectory, with a storage unit here now renting for $170, or an 8% y-o-y decrease. At the same time, month-over-month prices registered a slight, 0.6% rebound.

Brownsville, Texas, sees self storage prices climbing by over 5%

Only 10% of the 150 major cities across the country experienced self storage price upticks, with Brownsville, Texas, ranking first. A self storage unit in Brownsville rents for $118, 5.4% more on a year-over-year basis. With around 5 square feet of storage space available per capita, the Texan city, that also experienced a 2.7% population increase over a five-year period, continues to expand the local inventory. Over 119K square feet of new self storage space is forecasted to be delivered here in 2024.

A second Texan city experiencing higher self storage rates hikes is Grand Prairie, where the average unit goes for $108 per month, corresponding to a 4.9% year-over-year increase.

Port St. Lucie, Florida, experienced a neat 5% y-o-y street rate expansion, with the growth accelerating on a month-to-month basis as well, reaching 3.4%. Currently, the average storage unit in Port St. Lucie, a city that experienced a whopping 5-year population increase of almost 18%, rents for $135 per month. The relatively low availability of storage space, at only 4.4 square feet per capita, contributes to prices going up. However, at least for now, the local inventory stays put, with no new deliveries expected this year.

Anchorage, Alaska, the country’s sixth most expensive major city for self storage, registers a 4.2% increase in year-over-year prices, reaching a monthly rate of $222. The local demand for self storage, determined by the frequent need to store hobby and sport-related items, as well as a high population turnover, is pushing prices up, against the national current. Anchorage’s self storage sector is reasonably well supplied, albeit under the national benchmark, at 6.5 square feet of space per capita.

Large urban hotspots lead for self storage development

Although the safe storage industry is pacing its new deliveries in order to meet current demand levels on the market, construction activity continues particularly in cities with a low inventory. Los Angeles, California, ranks first for 2024 development, with almost 590K square feet of storage space forecasted to be added this year. Currently, Los Angeles is one of the county’s most underserved self storage markets, with an inventory of just 1.8 square feet of space per capita.

Top Cities for 2024 Expected Construction

After delivering over 460K square feet of storage space in 2023, Philadelphia, PA, is on track for 2024 as well, with over 550K square feet of storage space expected to be completed. The local inventory, albeit slightly more generous compared to Los Angeles, is still less than half the national benchmark, at just 3.1 square feet per capita.

Construction activity is on a roll in several Texan cities as well, With Fort Worth, Houston, and San Antonio also making the list of top 10 most active cities for self storage construction activity in 2024.

Methodology

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

This report analyzes self storage street rates and construction deliveries in January 2024.

We included the most populous 150 cities with an active self storage inventory of at least ten facilities. The analysis only encompasses same-store properties that have had a market presence for the previous 12 months.

The self storage street rate is calculated as an average, based on the weighted averages of the rates for all storage unit sizes, both non-climate-controlled and climate-controlled.

We calculated population growth over a five-year interval (2017 to 2022) using data from the U.S. Census.

Data on self storage street rates, deliveries, and 2024 forecasted construction activity 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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