Thanks to positive trends and fundamentals in the storage industry, rents continued to rise in January. On a year-over-year basis, street-rate rents rose 7.6 percent for the average 10×10 non-climate-controlled and 7.4 percent for the climate-controlled units of similar size.
Overall, annual street rate performance was positive in all major metros tracked by Yardi Matrix, with 11 of the top 31 metros registering double-digit rent growth and more than 20 of these markets clocking in at or above 5 percent for the standard 10×10 climate-controlled and non-climate-controlled units.
Secondary and tertiary markets across the Sun Belt region took the lead in rent growth, with some metros experiencing double-digit rent growth for almost all unit types. On an annual basis, Atlanta recorded the highest rent increases for the average 10×10 climate-controlled and non-climate-controlled units, up 14.8 percent and 17.5 percent.
Despite being significantly oversupplied, with 11.6 net square feet of storage space available per capita, above the 7 net square feet national figure, Charleston, S.C., saw annual rent rates climb 13.7 percent for 10×10 climate-controlled units and 11.8 percent for non-climate-controlled units of similar size.
Although gateway markets are a bit behind in rent increases, some markets experienced relatively strong growth. Chicago (10.4 percent) led the major cities, followed by Los Angeles (6.8 percent) and Boston (5.4 percent). Although families and individuals returning to gateway cities are producing some demand for storage, overall growth is expected to remain slow compared to high in-migration areas.
Nationwide, projects under construction or in the planning stages accounted for 8.9 percent of existing stock, a slight 10-basis-point increase over the previous month. There were 3,831 self storage properties in various stages of development as of January. This included 731 facilities under construction, 1,287 planned and 520 prospective projects.
Due to positive forecasts about demand and rent growth, developers remain eager to bring new supply to the market. However, rising construction costs will most likely slow down the development activity across the country. New York and Las Vegas continue to lead the nation in construction, with projects under construction or in the planning stages accounting for 18.6 percent and 15.9 percent, respectively.
Read the full Yardi Matrix report here.