Emerging Markets for Self Storage

Demand for self-storage facilities is growing in the U.S. and the cities that are underserved and where there is most opportunity are often smaller metro areas of less than two million in New England, the west and Midwest.

Deliveries of self-storage facilities in the U.S. are expected to rise in 2024 to their highest level since 2020, a new report from RentCafe predicted. That would add 54 million SF of rentable space, compared to the 53 million added in 2023.

Several factors are driving demand. To the usual four Ds: death, divorce, dislocation and downsizing, have been added decluttering and distribution. Working from home and smaller houses have driven some people to move items for which there is no longer any room to rented storage facilities. One-fifth of Americans rely on storage away from home to maximize space, the report stated.

In addition, many small businesses have turned to storage units instead of warehouse space, since it is often more affordable and more flexible.

The return of the snowbird phenomenon after the pandemic and the growing popularity of RV-ing have piled on demand.

“The blend of economic strength, dense housing markets and an abundance of lifestyle options is a boon for self-storage businesses,” the report commented. On this basis, it identified Springfield, MA as the nation’s best opportunity for them; it has the second-lowest self-storage inventory per capita at 3.7 square feet, a population that grew 10.7% over the decade, positive migration, small homes, 66,000 college students in the area, and many storage unit-seekers. Other cities in New England that scored high were Worcester, MA, Worcester, MA-CT, Providence-Warwick, RI-MA and even Boston.

In New York state, Rochester stood out as a desirable market. Top ranked in Pennsylvania were Pittsburgh and Harrisburg-Carlisle while the three-state metro area of Philadelphia, PA, Camden, NJ and Wilmington, DE also ranked in the top 20.

The Mountain West also has much to offer. “The region has seen massive growth in recent years, both in terms of economy and population – and the self-storage industry stands to win big from this combination,” the report said. Boulder, CO was ranked third in the nation, boosted by a transient population that requires temporary storage and a high number of remote workers. In addition, “the city’s active lifestyle often means residents accumulate gear for skiing, hiking and biking, and self-storage becomes essential for storing seasonal equipment and gear.”

Other Colorado cities with potential are Greeley and Denver-Aurora-Lakewood. And in Arizona, fast-developing Phoenix-Mesa-Chandler presents other opportunities.

The Midwest benefits from growing populations in its urban and suburban areas and a diverse climate that encourages storage of seasonal items. Ann Arbor, MI came in third nationally.

Other highly ranked locations include Lansing-East Lansing, MI, Minneapolis-St. Paul, MN and Bloomington, WI, Lincoln, NE and Youngstown-Warren-Boardman, OH-PA.

The only California market to make the top 20 for storage opportunities was Los Angeles. The city has the second-highest housing density among the 150 studied and housing remains highly competitive. “Whether downsizing, renting or buying, there’s a lot of activity on the housing front, which supports extensive self-storage use. Additionally, the remote work force in LA is a million strong. The demand for vehicle storage is robust,” the report noted.

Way out in the Pacific, Honolulu, Hawaii stood out as the country’s most undersupplied market. It is also one of the most expensive. Monthly rent for a storage unit runs at $277 on average – more than double the national figure. “The area seems to be in dire need of additional storage space,” the report said.