Don't Open That Door, McGee: Philadelphia Seventh Among Markets Without Enough Self-Storage

Devon Self Storage, Oregon Avenue, Philadelphia, PA

PHILADELPHIA— Philadelphia ranks seventh among markets without sufficient self-storage capacity, according to a new report from the Self Storage Valuation Group at CBRE Valuation & Advisory Services. “Analysis by major Metro Markets can be useful for comparison from a national perspective but these metrics should not be relied upon for local area analysis. Factors that affect local self-storage product type include zoning regulations, local demographics, household income and density, among others,” says Christian Sonne , CRE , executive vice president of CBRE’s Self Storage Valuation Group. “The best analytics for this sector are by local trade area. From our Investor Surveys and zip code studies of existing facilities, it is clear the trade area for self-storage is relatively small, generally within a three-mile radius for a typical suburban property.” The report ranks market conditions overlaid with a scoring model based on occupancy, income, and cap rate data in top Metro markets based on REIS data, along with cap rate data from the CBRE 2Q Investor Survey.  The result is a ranking of top Metro Markets for self-storage, segmented among top performers and market conditions (under-supply, over-supply, or equilibrium). Among the markets identified in the report as having too much self-storage supply are: Oklahoma City, Memphis, Columbus, Kansas City, Salt Lake City, Houston, Dallas and Seattle. The top five under-supplied markets are New York, San Jose, Los Angeles, San Diego and Baltimore.

Market conditions are determined by CBRE’s proprietary econometric model that compares existing supply per person to four demographic variables: population, percent of renters, average household size and average household income

“In the City of Philadelphia, we are seeing conversions of older industrial loft buildings into self-storage facilities and servicing a smaller radius due to the higher density,” says Robert Kaltman , vice president, Valuation & Advisory Services at CBRE . “In the suburbs, we are seeing a proliferation of modern facilities with primarily climate-controlled units.” The CBRE Self-Storage Valuation group consists of 40 valuation professionals focused exclusively on the self-storage sector, with access to in-depth levels of market research and real time data from the firm’s other lines of service. The group appraises more than 500 single asset facilities annually in the US and completes more than $2 billion in quarterly analytics for institutional investors.