Which major metro areas hold the most promise for self-storage growth?

November 14, 2013 1
Which major metro areas hold the most promise for self-storage growth?

New York City reigns as the undisputed financial and media center of the U.S. As it turns out, the Big Apple region also reigns supreme in opportunities for self-storage growth.

A new report from commercial real estate firm Cushman & Wakefield shows that among the 50 largest U.S. metro areas, the New York area ranks as the most under-supplied when it comes to self-storage space.

“If a market is under-supplied, it suggests there is demand for more self-storage,” said Chris Sonne, executive managing director of the Self Storage Industry Group at Cushman & Wakefield.

Sonne’s team at Cushman & Wakefield employed an econometric model—a tool that economists use to forecast economic development—to come up with its third-quarter snapshot of under-supplied, over-supplied and neutral self-storage markets. The model weighs projected demand against existing supply, measured by the amount of self-storage square footage per person.

Factors taken into account for each metro area were number of self-storage facilities, total self-storage square footage, self-square footage per person, self-storage rental rates, self-storage occupancy rates, self-storage construction and renovation activity, population, number of renter-occupied housing units, average household size and average household income.

Cushman & Wakefield then crunched those numbers to come up with a score for every metro area, with each one dropping into the under-supplied, over-supplied or neutral bucket.

In all, Cushman & Wakefield classified 17 of the 50 largest U.S. metro areas as under-supplied in self-storage. In descending order based on ranking, here is the complete list of under-supplied metro areas:

1. New York
Number of facilities: 1,005
Square footage per person (existing): 3.57
Square footage per person (projected demand): 3.63

2. Los Angeles
Number of facilities: 932
Square footage per person (existing): 4.69
Square footage per person (projected demand): 6.24

3. Baltimore
Number of facilities: 189
Square footage per person (existing): 4.40
Square footage per person (projected demand): 5.62

4. San Diego
Number of facilities: 271
Square footage per person (existing): 6.09
Square footage per person (projected demand): 7.15

5. Portland, OR
Number of facilities: 282
Square footage per person (existing): 5.50
Square footage per person (projected demand): 6.85

6. Providence, RI
Number of facilities: 150
Square footage per person (existing): 4.65
Square footage per person (projected demand): 6.94

7. Hartford, CT
Number of facilities: 108
Square footage per person (existing): 5.04
Square footage per person (projected demand): 5.85

8. Buffalo, NY
Number of facilities: 78
Square footage per person (existing): 3.93
Square footage per person (projected demand): 6.68

9. Richmond, VA
Number of facilities: 125
Square footage per person (existing): 5.71
Square footage per person (projected demand): 6.52

10. Detroit
Number of facilities: 419
Square footage per person (existing): 5.56
Square footage per person (projected demand): 6.49

11. Milwaukee
Number of facilities: 158
Square footage per person (existing): 5.64
Square footage per person (projected demand): 6.91

12. Philadelphia
Number of facilities: 469
Square footage per person (existing): 4.82
Square footage per person (projected demand): 5.53

13. Cincinnati
Number of facilities: 147
Square footage per person (existing): 4.09
Square footage per person (projected demand): 6.72

14. Rochester, NY
Number of facilities: 104
Square footage per person (existing): 4.15
Square footage per person (projected demand): 6.78

15. Cleveland
Number of facilities: 217
Square footage per person (existing): 5.43
Square footage per person (projected demand): 6.61

16. Louisville, KY
Number of facilities: 162
Square footage per person (existing): 6.13
Square footage per person (projected demand): 6.98

17. Minneapolis-St. Paul
Number of facilities: 310
Square footage per person (existing): 4.91
Square footage per person (projected demand): 5.71

Sonne cautioned against using these rankings as the only yardstick for investing in a self-storage market. Rather, he said, it’s “just a good place to start.” It’s best to do an in-depth analysis of three- to five-mile trade areas within a metro area, according to Sonne.

A metro area “may have zoning restrictions that tend to bunch storage facilities in certain areas, and these trade areas may be over-supplied,” Sonne said. “Across town, however, there may be less restrictive zoning and less bunching so that that trade area is under-supplied.”

In compiling the report, Cushman & Wakefield relied on figures for 8,645 self-storage facilities in the 50 largest metro areas.

To buy a copy of the report, visit http://store.insideselfstorage.com/p/317/self-storage-market-conditions-report-2013.

 

Like this post? Subscribe to the Storage Facilitator newsletter


* = required field