COVID-19 Impact Still Tough on Self Storage Rents
The self storage sector continued to see negative effects caused by the pandemic, as street-rate performance declined in all the top markets tracked by Yardi Matrix.
Self Storage Under Construction & Planned Percent of Existing Inventory
As the nation grappled with fallout from the novel coronavirus outbreak, self storage rents continued to decline in May. On a year-over-year basis, street rates slid 4.3 percent for the average 10×10 non-climate-controlled and 6.7 percent for climate-controlled units of similar size. Over the past 12 months, street rate performance was negative in all the top markets tracked by Yardi Matrix.
On a month-over-month basis, street rates fell 0.9 percent for the standard 10×10 non-climate-controlled and 0.8 percent for climate-controlled units of similar size. Chicago saw a 1.1 percent increase in street rates month-over-month for non-climate-controlled units, while street rates for climate-controlled units remained unchanged.
Despite the heavy decline in street rates, demand for storage space appeared to be stable, with move-ins and move-outs slightly recovering over the past few weeks. Overall, the pandemic seems to be both fueling and diminishing demand for self storage: While people who need to downsize are driving the need for storage units, growing unemployment might lead to a decrease in demand.
The new-supply pipeline seems to be less affected by the COVID-19 outbreak, as developers continued to push through with new projects. Nationally, projects under construction or in the planning stages accounted for 9 percent of existing stock, a 20-basis-point increase month-over-month. New York saw a notable uptick in development activity—the metro’s new-supply pipeline represented 17.7 percent of total inventory, a 70-basis-point growth over the previous month. Despite the positive signs, the coronavirus outbreak is expected to slow down deliveries and cause delays in development throughout 2020.
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