West Coast Claims Four of the Top Self-Storage Markets

The West Coast is home to the top self-storage markets in the country. According to a new report from Storage Café, Los Angeles, San Diego, Las Vegas and Phoenix are four of the top five self-storage markets in the country, following New York—the top market for self-storage investment.

Los Angeles self-storage investment volume totaled $92 million in 2020, while San Diego totaled $67 million, Las Vegas totaled $64 million and Phoenix racked up $63 million. In total, the top five markets accounted for 20% of total self-storage investment in the US last year.

“One of the most important investment drivers specific to self-storage is the perceived dependability of the industry. It rode out the financial downturn that began in 2007 better than some other sectors, and it is hoped it will do this at other times as well. It is considered a necessary service, helping people in all manner of situations, for instance when they have to downsize or make space in their homes for enlarged households. In addition, it is thought to be easier to operate than sectors such as residential housing, which are more people-centric. These factors further boost its popularity with investors,” Francis Chantree, a senior editor at Storage Café, tells GlobeSt.com.

Los Angeles and San Diego have a dearth of self-storage supply, driving investment demand in the markets. “At the close of 2020, Los Angeles and San Diego offered, respectively, around 4.7 and 5.9 square feet per capita at rents of $191 and $162 for 10×10 units. These compare to national averages of 7 square feet per person and $118. Investors in these markets can clearly benefit from opportunities where under-supply has traditionally been common,” says Chantree.

While Las Vegas and Phoenix have more supply, the markets also have strong population growth and increasing demand for self-storage. “Las Vegas and Phoenix offer a more generous 8.4 and 7.6 square feet of storage per capita at street rates of $109 and $108, respectively,” says Chantree. “These markets have been much more highly penetrated by self-storage investment than the Californian metros, but investor confidence is still strong there.

These metros also have healthy new construction pipelines for new self-storage space. “The amount of storage space that was planned or under construction at the end of 2020, seen as a percentage of the existing inventory, was more than 14% for Las Vegas and more than 12% for Phoenix,” says Chantree. “Both cities’ self-storage markets have been boosted in recent years by their increasing populations—including many retirees—a factor which is well known as one of the sector’s main drivers.”

Outside of the top five, Oregon also made the list for top investment markets. The state saw a four-time increase in self-storage sales last year totaling $75.9 million. The previous nine-year average was $18.4 million. Pricing in the state also increased 47% rise, from $74.9 to $110.6, according to the report.