High supply levels are slowing rent growth in the U.S. self-storage industry, according to a new report from Yardi Matrix.
Street rates for standard 10-foot by 10-foot non-climate-controlled units tumbled 2.5 percent year-over-year in July, with the average rate for climate-controlled units falling 4.3 percent. Street rate performance declined in 89 percent of the top metros tracked by Yardi Matrix.
Compared with July 2018, street rates have deteriorated even in markets with strong demand and limited new supply, such as large metros on the West Coast, the report said.
The self-storage sector continues to reap the benefits of sustained economic growth and favorable demographic dynamics in many markets. But while developers continue to break ground on new projects, ongoing heightened completion levels provide headwinds to street rates. As a result, both REITs and private storage operators are strategically pricing units in order to remain competitive in most heavy-supply metros.
On a national level, Yardi Matrix tracks a total of 2,118 self-storage properties in various stages of development — comprising 647 under construction, 1,106 planned and 365 prospective projects. In August, the national new-supply pipeline as a percent of existing inventory increased by 0.1 percent from the previous month, as several projects advanced from planned to under construction.
Yardi Matrix also maintains operational profiles for 25,247 completed self-storage facilities across the United States. This brings the total data set to 27,365 self-storage properties. The share of projects in various stages of development accounts for 9.5 percent of the completed inventory.
