Top Markets For Self Storage Construction – Multifamily Real Estate News

The nationwide self-storage pipeline continued to grow in October, with 110 projects under construction totaling more than 57.5 million square feet. Another 121.4 million square feet of storage was in the planning stages. Nearly 46 million square feet of self storage space were delivered last year, with completions declining in 2022 as only 30.1 million square feet of space came online in October.

The table below highlights the top five self storage markets by construction activity, by square footage of ongoing projects, using Yardi Matrix data. In total, there were 185 self-storage properties under construction in these markets as of October, representing just over 23% of ongoing projects nationwide.

Rank Market Under construction (KSF) Number of projects Existing square meters per capita
1 New York 5,312.3 69 2.47
2 Dallas-Fort Worth 3,846.3 44 8.89
3 Los Angeles 2,282.2 27 4.25
4 Phoenix 1,798.7 23 8.45
5 Orlando 1,727.5 22 8.99

Source: Yardi Matrix

1. New York

Looking at the New York City development landscape, construction activity across all sectors has returned to pre-pandemic levels, according to a recent report by the New York Construction Congresswith construction spending expected to reach $86 billion in 2022.

Coming down into the self storage sector, the market is number one when it comes to square feet of space going on. As of October, New York had 69 projects under construction totaling 5.3 million square feet. Despite having the second-largest completed inventory — 74.3 million leasable square feet — the market has just 2.47 net square feet of available storage space per capita, well below the national figure, as well as being lower than the other markets on our list.

The New York pipeline also includes 128 planned properties totaling 9.1 million square feet, combined with projects under construction and planning representing 19.4 percent of existing stock. Completions are expected to surpass 2021 figures, as Metro expanded by 32 properties totaling 2.6 million square feet last year. The 31 projects delivered this year already amounted to 2.6 million square feet.

2. Dallas-Fort Worth

The Metroplex is expected to close this year as the nation’s fifth-fastest-growing subway with projected GDP growth of 3.1 percent for 2022, according to The Dallas Morning News. Economic growth, coupled with robust population growth and a business-friendly environment, is fueling further demand for housing and self-storage space.

The Dallas-Fort Worth Market had 3.8 million square feet of self storage space under construction in 44 projects, completed by 54 developments in the planning stages, which included 3.6 million square feet of storage space. The pipeline of new supplies represented just over 10% of existing inventory in October.

The market has the largest self-storage footprint at 74.5 million square feet, or 8.89 net available square feet per person, above the national average of 8.33. Overall, shipments were down with just 667,336 square feet of projects completed in October, a drop from 2021, when self storage inventory increased by 2.4 million square feet.

3. Los Angeles

As seasonality takes hold in the industry, Los Angeles was among the only three metropolitan areas where rates for standard-sized 10×10 units did not change month-to-month starting in September. The following month, the market had 27 self-storage projects under construction, totaling 2.3 million square feet. LA had nearly twice as many properties in the planning stages, equaling 4.9 million square feet for the pipeline. In total, the leasable square feet of storage space under construction, combined with those in the planning stage, represent approximately 10.2 percent of the existing self-storage inventory on the market.

Ten 1.1 million-square-foot properties went online in 2021, while 2022 is catching up, with approximately 964,000 square feet of storage across 11 self-storage assets completed in October. With only 4.25 net square feet available per capita, there is room for future development to add to Metro’s 70.6 million square feet.

4. Phoenix

As the top tier western market by volume of multi-family investment continues to show strong fundamentals, developers across all commercial real estate sectors have continued to favor Phoenix. As of October, the market had a self storage pipeline that accounted for 14.6% of existing inventory. Taking a closer look, the pipeline of new developments breaks down into 23 ongoing projects, totaling 1.8 million square feet. An additional 52 developments in the planning stages encompass approximately 3.9 million square feet.

With an inventory of approximately 38.7 million square feet, Phoenix had 8.45 net square feet of available storage space per person, slightly above the national average. Completions are expected to keep pace with last year, as 17 properties encompassing approximately 1.5 million square feet went online in 2021. As of October, more than 1.2 million square feet of space have been delivered.

5. Orlando

Rounding out the list, the market had approximately 1.7 million square feet of space underway across 22 projects expanding Orlando’s 27 million square foot footprint. The pipeline also included 31 projects in the planning stage totaling 2.3 million square feet, or nearly 15 percent of total inventory. In September, of the top 31 markets tracked by the Yardi Matrix, Orlando had the largest annual gains for air-conditioned 10×10 units at 4.2 percent, while for similarly sized non-air-conditioned units rates increased 3.4 percent on an annual basis.

Of our top five markets, Orlando had the highest leasable square feet per capita in existence, at 8.99. Completion was down from last year, when 15 properties totaling 1 million square feet came into operation. Seven projects totaling approximately 470,000 square feet were delivered in the first ten months of the year.

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