of supply and demand in any given place, and also of the sector’s profitability and attractiveness to inves - tors there. By looking at average rates through sev - eral recent years and across the nation’s major cities, consistent trends can be observed, giving potential self-storage developers confidence and some of the vital guidance they need. ALMOSTHALFUS LARGE CITIES SEE POSITIVE 2020 SELF-STORAGE RENTTRENDS Rents for non-climate-controlled 10’x10’ units — the ‘standard’ type often used as a benchmark — over the last four years provide a good measure of consistent trends in the industry. Across all US cities with over 500,000 inhabitants, the average street rate dropped from $126.8 in 2017 to $123.7 in 2020, the annual decreases being around one percent in 2019 and 2020 and half that in 2018. The average drop across all these large cities was -2.13 percent, with 46 percent of them seeing an increase. (The averages for all U.S. cities of any size during that time were slightly lower than the figures for these large cities.) The average self-storage inventory across the nation’s large cities by the end of 2020 was 6.82 sq. ft. per capita, roughly the same as for the nation as a whole, and a figure that has gradually increased since 2017.
Self-storage can be a less stressful business than other real estate sectors. Start-up costs may well be lower, and developers often note that it is easier to operate than com - parable sectors that are more people intensive. In addi - tion, communities often appreciate self-storage as it tends to be a local industry geared to serving customers within a radius of just a few miles, and town halls often welcome its ability to repurpose vacant sites and buildings. However, even a sector like self-storage can experi - ence over-saturation, and construction of facilities has indeed slowed in some areas. And then there was the impactful year of 2020, where the sales volume of storage facilities totaled $2.3B for 32.9M sq. ft. in 521 properties, down from the 54.1M sq. ft. in 852 facilities that was sold in 2019 for almost $4B. But confidence in the market was demonstrated by the fact that the average price per square foot of $70.9 during 2020 was only slightly down on the average of $73.3 seen in 2019. SELF-STORAGE EXPERIENCES DOWNTURNS, ANDADAPTS The industry has mechanisms for dealing with down - turns, one being the temporary lowering of storage rents to maintain occupancy and a loyal customer base. The street rates advertised for units are an indication
TOP US CITIES BY STREET RATE INCREASES 2017-2020
RANK
CITY
2017
2018
2019
2020
2017-2020
20.74%
$102
$97
FRESNO, CA
$90
1
$84
15.14%
$83
$79
EL PASO, TX
$74
2
$72
13.31%
$106
$105
LAS VEGAS, NV
$99
3
$94
11.68%
$97
$96
TUCSON, AZ
$91
4
$87
8.21%
$98
$95
ALBUQUERQUE, NM
$92
5
$91
7.39%
$188
$189
SEATTLE, WA
$186
6
$175
5.97%
$112
$109
PHOENIX, AZ
$108
7
$106
4.32%
$232
$228
LOS ANGELES, CA
$225
8
$222
3.91%
$135
$129
PHILADELPHIA, PA
$129
9
$130
3.04%
$237
$240
NEW YORK, NY
$243
10
$230
-2.22%
$124
$125
NATIONAL AVERAGE
$126
$126
Note: Average rates for a 10x10 non-cl imate control led storage uni t Source: STORAGECafé analysis of Yardi Matr ix and U.S Census Bureau data.
COMMERC IAL REV I EW : : 13
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