Beyond the long-standing interaction between movement in the housing market and the health of self-storage , the ongoing uncertainty in the office and retail sectors also has benefited self-storage . Offices face a greater need for short-term storage for items such as furniture as they search for lower rents for more desirable properties and new space given increased work-from-home trends . Retail turned to self-storage to house inventory , particularly among smaller businesses who shifted to an e-commerce model in light of pandemic considerations , and either did not require or were priced out of traditional warehouse / distribution space .
Rents for both climate-controlled and non-climate-controlled 10-foot-by-10-foot units , the most popular storage unit size , have experienced healthy growth over the past several quarters . Although rent growth for these spaces has recently contracted from the stratospheric growth experienced earlier in 2021 , performance in the self-storage sector is nevertheless robust . Comparing 3Q2020 to 3Q2021 , 10-by-10 climate-controlled units saw their largest yearover-year rent increase to date , growing by 13.7 percent . Meanwhile ,
Beyond the long-standing interaction between movement in the housing market and the health of self-storage , the ongoing uncertainty in the office and retail sectors also has benefited self-storage .
10-by-10 non-climate-controlled year-over-year rent growth , which posted at 11.2 percent , was also the highest increase on record . Regionally , the self-storage sector reflects national trends in population movement — the largest vacancy declines and rent growth have been in the Southwest , home to many growth metros that have attracted new inhabitants during the pandemic .
Typically , this sector does quite well in the second quarter as people tend to relocate between the end of a school year and before the start of the next . The strong , albeit more modest , numbers are due to the sector ’ s typical cyclicality , which favors the summer months . The pandemic-induced macroeconomic changes , which propelled migration shifts to an extent not seen in decades for much of 2020 and the first half of 2021 , seem to have dissipated a bit . However , we can expect to see continued positive metrics as lifestyle and demographic changes brought on by the increased acceptance of remote work will continue to benefit this sector through 2022 because people are now more mobile and have both a stronger desire and ability to relocate .
The supply of new properties is expected to increase as the year progresses . And despite strong projected inventory growth , the forecast for the vacancy rate in years to come is expected to remain well below the 2020 year-end rate of 14.6 percent . However , Reis forecasts the supply of new inventory will consistently decrease over the next 10 years and the vacancy rate will follow suit — expecting to reach a low of 10.1 percent , resulting in steady , positive rent growth . Undoubtedly , self-storage , much like other niche property sectors , has emerged as a clear winner in the pandemic real estate environment and will continue to perform robustly in the months and years to come .
Ermengarde Jabir , Ph . D . Economist with Moody ’ s Analytics Reis
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