Looking Into The Future of Self-Storage
Terrydale Capital
Mar 4, 2024 4 Min read
Self-storage has been a study asset class throughout the last 5-years and demonstrated its resilience through both a worldwide pandemic and recent tumultuous economic market conditions. Supply of self-storage units has seen a surge in development and availability to combat the large increases in demand. Despite the surge in growth and continued demand, forecasts have seen a shift from the surge to a downward trend with smaller and smaller growth rates extending past 2026.
2023
At the outset of the year carrying over from 2022, there existed a total of over 50,000 self-storage facilities across the country. By the end of Q4 2023, there sat an excess of 49,086,197 units of self-storage supply across the United States. Overall, 2023 saw an unexpected increase in supply by year's end compared to prior estimates at the beginning of that year.
2024 - 2025
Based upon a recent Yardi Matrix report, 2024 and 2025 respectively are estimated to continue the trend of rapid growth in self-storage supply. 2024 is estimated to have a 10.9% in delivery increase and 2025 is expected to see a 12.5% increase in deliveries especially as construction timelines continue to stabilize.
2026 - 2028
After 2025, estimations for supply begin to become more conservative and signify a downward trend compared to prior years of robust growth. Combined growth rates for 2026 and 2027 are estimated to sit near only 2.0% and will subsequently decline to 1.5% for years 2028 and 2029. Compared to previous estimates, the new revision from Yardi Matrix results in a 38.7% reduction in new supply in 2028.
How These New Trends Translate
Construction times are cooling. While many project timelines are still above average leading to many projects being stagnated or some being abandoned, there is a marked decrease in projects entering the development pipeline. This signals a shift towards a cooler interest in the development of self-storage facilities. This can mean that investors may find a shift in opportunity towards established and pre-existing facilities the closer we edge towards 2028 and beyond.
In Conclusion
While self-storage has seen a boom in development despite expectations of a slowdown in 2023, the market is poised to cool in terms of sentiment towards self-storage development. Despite the sentiment shifting, this does not signify that there will be a cooling in overall demand from the public towards self-storage. Rather, it more so signifies the change into more dedicated and meaningful development which in turn will help ease oversaturation in a variety of markets.
If you are thinking of investing in your own self-storage industry, it pays to have the right team by your side. At Terrydale Capital, we have dedicated experts in the self-storage industry ready to help guide you to success. Contact us today!
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