Self Storage Development in U.S. on the Rise in 2017

Self Storage Development in U.S. on the Rise in 2017

Commercial News » Dallas Edition | By Michael Gerrity | October 9, 2017 8:00 AM ET

Dallas, Miami and New York are Leading Metros for New Projects

According to CBRE, new construction of self-storage facilities is on the rise, with approximately 900 facilities expected to be constructed in 2017 - a 50% increase on the 600 new projects constructed last year.

Dallas is expected to see the most new construction this year, with an estimated 49 projects and 9.02 million square feet set to be delivered. Miami (21projects / 3.86 million sq. ft.); New York (16 projects / 2.92 million sq. ft.); Houston (16 projects / 2.87 million sq. ft.); and Atlanta (15 projects / 2.68 million sq. ft.) complete the top five metros for new construction in 2017.

There are currently 474 self-storage projects under construction in the U.S. as of Q3 2017, representing about half of planned new developments. Historically, about one-third of planned facilities are constructed, but more recently there has been a significant increase in the number of planned projects and actual starts, with the planned/start ratio at the highest level in ten years. 

A natural refresh rate for the self-storage sector is 1% of total stock, with an average year having approximately 500 new starts.  Since this refresh rate has only recently occurred, and there has been limited new construction since 2008, CBRE estimates that supply and demand metrics in the self-storage sector across the U.S. are generally at equilibrium in 2017.

"New construction is the hot topic in the self-storage sector. While some investors are concerned about the level of new construction, overall supply and demand metrics remain roughly in line," said R. Christian Sonne, executive vice president, Self-Storage Valuation Group, Valuation & Advisory Services, CBRE.

"Of the leading markets for new construction, Texas has been a state that has typically encouraged new development, New York has historically been under-served, while Miami has had pockets of significant demand, such as Coconut Grove. We are also seeing increased demand in those markets impacted by the recent and historic hurricanes. Self-storage provides comfort for those who need to move belongings that could potentially be in harm's way to a facility for safe keeping. In both Florida and Houston, this has meant increased demand at the same time supply has declined due to damage," added Mr. Sonne.

Five metros changed market condition. Atlanta, Austin, Denver and Nashville were considered at equilibrium and will be over-supplied after new construction is complete. Sacramento moved from under-supplied to equilibrium after new construction is complete.

Some metros were already over-supplied and added new construction. Dallas is 1.57 SF/person over-supplied and went to 2.81 SF/person oversupplied, while Oklahoma City went from 4.70 SF/person over-supplied to 5.40 SF/person oversupplied.

Miami (20%); Nashville (17.7%); Dallas (16.3%); Austin (13.9%); and, Charlotte (12.3%) have the highest amount of new construction as a ratio of total supply.

Real Estate Listings Showcase

This website uses cookies to improve user experience. By using our website you consent in accordance with our Cookie Policy. Read More