Self Storage Market Recap

Zachary Urow May 31, 2024

As the busy summer leasing season approaches, storage operators are remaining optimistic that existing customer rate increases will help new customers settle into in-place rates quickly, in addition to increasing street rates.

Although the self storage REITs Q1 2024 results are
in and performance continues to remain slow, the average decrease in the REIT’s quarterly occupancy has improved over previous quarters, according to Yardi.

Leasing Strategies Impacting street Rate Performance

The Q1 2024 results for self storage REITs indicate a performance slowdown. Although average occupancy declined by 0.8%, this represents an improvement over previous quarters. Revenue growth increased by only 0.2%, while NOI growth dropped to -1.6%, primarily due to increased marketing and insurance costs.

Street Rate Performance Weakens In Sun Belt Metros

While nearly all top metros recorded positive rate growth month-over-month in April, some are still struggling due to new supply. For example, Orlando’s self-storage market has been facing challenges due to a new supply pipeline, with 8.9% of existing NRSF – leading to a 6.1% decrease in same-store asking rates for 10×10 NCC units in April.

New Supply Update

The national new supply pipeline decreased by 10 basis points – with 64.6 million NRSF under construction in April. Although construction starts declined at the end of 2023, extended construction times have kept the pipeline stable in Q1 and early Q2. Yardi Matrix’s Q2 forecast remains consistent, predicting 54.5 million NRSF deliveries in 2024 and 47.6 million NRSF in 2025

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