BY THE NUMBERS WITH
By Ermengarde Jabir , Ph . D .
FROM STRENGTH TO STRENGTH
Amid steadily increasing occupancy and rents , self-storage is primed for continued growth in the next year
The past two years have been a rollercoaster for commercial real estate with different sectors experiencing a variety of outcomes . While some property types , like office and retail , have fought to stay afloat and continue to face tremendous uncertainty in 2022 , others , such as multifamily and industrial , have flourished despite — or perhaps , in part , due to — the pandemic . Another property sector that falls into the latter category is self-storage , which has thrived amid the chaotic backdrop of COVID-19 . The success of self-storage is largely predicated on household formation , which leads to the accumulation of possessions that need homes , as well as the desire among existing households to relocate .
Self-storage had faced a sharp decline in occupancy for years . Over the past year , however , occupancy rates have steadily climbed in the sector , which includes both climate-controlled and non-climate-controlled units . The strong decline in vacancy rates in the Moody ’ s Analytics Reis data is supported by multiple self-storage REITs that have reported record occupancies , irrespective of seasonality .
Despite these stellar metrics for this niche sector , the one point of weakness in the self-storage sector , if it can even be called that , is in new completions as the supply of newly built facilities has progressively decreased over the past four quarters . However , this lack of new supply is likely a boon for rents because record quarterly absorption numbers indicate strong demand .
Additionally , despite continued rising occupancy in this sector and the slower pace at which new inventory is coming online , current supply can meet the demand for space .
National Self-Storage Metrics
200,000
Completions Net Absorption Occupancy Rate 90 %
Completions / Absorption ( in sf )
150,000
100,000
50,000
0
-50,000
89 %
88 %
87 %
86 %
85 %
Occupancy Rate
-100,000 |
1Q |
2Q |
3Q |
4Q |
|
|
2017 |
|
Source : Moody ’ s Analytics |
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COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE WINTER 2022