Metro Areas • Section 8
to a variety of factors including pent-up demand for apartments, re-urbanization, and growth in employment which draws more people to these areas—and many of these people need storage.
A In addition, Class A self-storage properties—those consid-
ered to be investment grade—tend to be located in major metro areas or MSAs (Metropolitan Statistical Areas) where the barriers to entry are very high. And again, as the demand for apartments or multi-housing residential areas continues to increase, espe- cially in major cities where re-urbanization is a growing trend, so does the need for storage increase.
According to Marcus and Millichap, the Los Angeles metro is one of these growth areas. Employment opportunities are be- ing created by the thousands, companies are expanding their office footprints and hiring for a multitude of positions, and the strength in the labor market is spilling over into the multifamily sector as builders remain active in order to meet demand for housing. Moreover, many residents will be lifelong renters be- cause of high home prices, providing safety and stability to de- veloper forecasts. And many of these people will need storage.
Given this, it is essential that we also look at the self-storage data trends in metro areas.
Self-Storage In Metro Areas Table 8.1 indicates the top U.S. metro areas in terms of quarterly occupancy growth for the first two quarters of 2015. Topping the list is Baltimore, which saw an increase of 3.5 percent, fol- lowed by the Greensboro/Winston-Salem MSA.
It is interesting to note that according to a Marcus & Millichap report, employers in the Baltimore metro area are adding positions in the government, edu- cation, and healthcare sectors—a move that is ex- pected to draw young college graduates to the area, the majority of whom will seek to rent apartments in “live-work-play environments.” In addition, a new 14-mile light-rail system will revitalize the city’s in- frastructure and further boost employment.
Minneapolis and Nashville saw substantial
gains in occupancy at 3.3 percent and 3.2 percent, respectively. According to Marcus & Millichap, the apartment market in the Minneapolis/St. Paul MSA has seen an abundance of employment opportuni- ties, along with Nashville, which continues to lure millennials with solid employment gains and en- tertainment attractions. For the past five years, the Nashville metro area has generated an average of 25,000 jobs annually, expanding employment more than 3 percent and surpassing the national average.
s we have seen in previous sections, self-storage remains robust in terms of property values, rental rates, and occu- pancies. This is especially true in metro or urban areas due
Atlanta’s self-storage occupancy rose by 3 percent, placing it in the middle of the Top 10, with Columbus, Tampa-St. Peters- burg, Boston, Houston, and Las Vegas also hovering near the 3 percent occupancy increase level.
Comparing rental rate increases for a 10-by-10 unit, only the
Greensboro/Winston-Salem MSA appears on the Top 10 Rental Rate Growth list as seen in Table 8.2. With a 4.9 percent rental rate growth, this MSA falls in the seventh position on the list.
As seen in Table 8.2, the Denver metro area saw the larg-
est increase in rental rates—6.3 percent—for a 10-by-10 non- climate-controlled unit. Down nearly a full percentage point is the Fort Worth metro area with an increase of 5.5 percent, fol- lowed by the Orlando, Austin, and St, Louis markets, all with a 5.3 percent increase.
Falling in line with
the Greensboro/Win- ston-Salem MSA, New York also saw a 4.9 percent increase in rental rates for this sized unit, with Char- lotte falling close be- hind at 4.8 percent. Rounding out the top 10 is Cleveland with a 4.5 percent increase.
When looking at the
10-by-10 non-climate- controlled rental rate growth for one year between Q2 2014 and
Table 8.2 –
Metro Area Rental Growth Non-Climate-Controlled (2015 Q1 - Q2)
Metro
Rank Area 1 Denver 2 Fort Worth 3 Orlando 4 Austin 5 St. Louis 6 Cincinnati
10 x 10
Rent Growth 6.3% 5.5% 5.3% 5.3% 5.3% 5.0%
7 Greensboro/Winston-Salem 4.9% 8 New York 9 Charlotte 10 Cleveland
4.9% 4.8% 4.5%
Source: © 2015 REIS, INC. Table 8.1 – Top 10 Metro Areas by
Increase in Quarterly Occupancy (2015 Q1 - Q2)
Metro Increase in
Rank Area Occupancy 1 Baltimore
2 Greensboro/Winston-Salem 3 Minneapolis 4 Nashville 5 Atlanta 6 Columbus
7 Tampa-St. Petersburg 8 Boston 9 Houston 10 Las Vegas
Table 8.3 –
Metro Area Rental Growth 1-Year Non-Climate-Controlled (2014 Q3 - 2015 Q2)
Metro
Rank Area 1 Denver 2 Los Angeles 3 Oakland 4 Orlando 5 Sacramento 6 Fort Worth 7 Atlanta 8 San Diego 9 Orange County
10 x 10
Rent Growth 9.1% 7.7% 7.0% 7.0% 6.6% 6.5% 6.4% 6.1% 6.1%
10 Northern New Jersey 6.0% Source: © 2015 REIS, INC. 2016 Self-Storage Almanac 97
3.5% 3.4% 3.3% 3.2% 3.0% 2.9% 2.9% 2.8% 2.8% 2.8%
Source: © 2015 REIS, INC.
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