Metro Areas • Section 8
As previously mentioned, given the job market boost in Los Angeles, there is an anticipated 5.7 percent growth rate in rental rates over the next three years with a 4 percent increase over the next five years. While the Oakland metro area does not report substantial growth over the next one- to three-year periods, there is a 4 percent increase forecast over the next five years as seen in Table 8.7.
The Chicago Sub-Market It bears worth repeating that self-storage is a very market- specific business. What pertains to one location may be entirely unrelated to a market area three to five miles away. This also applies to sub-markets within a metro area. The Chicago MSA is an exemplary study in this principle.
Chicago, the largest self-storage market in the Midwest,
has seen its occupancy numbers run very close to the national average, as seen in Table 8.9. In the second quarter 2014, the national average stood at 89.1 percent, while Chicago’s metro average was slightly better at 90.3 percent. Comparatively, for the second quarter 2015, the national average occupancy rate came in at 90.2 percent as seen in Table 8.8, which was bet- ter than Chicago’s metro average of 89.6 percent, indicating a reversal of sorts.
It bears worth repeating that self-storage
is a very market-specific business. What pertains to one location may be entirely unrelated to a market area three to five miles away.
Within the Chicago metro area, occupancy rates for 2Q 2015
range between 85.9 percent in Central Chicago to 93.2 percent in the Joliet and the Far Southwest market. Comparing Q2 2014 to Q2 2015, the greatest increase in occupancy (1.8 percent) oc- curred in the Far West Suburbs, with the greatest drop in occu- pancy (3.4 percent) seen in the Glenview/Evanston metro area.
Drilling down further into Chicago’s submarkets, the best
performing submarket in 2014 was Aurora/Naperville/Wheaton with an occupancy rate of 93.9 percent, while the worst per- forming submarket was the South Shore at 88.1 percent occu- pancy—a differential of 5.8 percent.
One year later in 2Q 2015, the Joliet/Far Southwest mar-
ket became the new best performer with an occupancy rate of 93.2 percent. Relatively, the worst performing submar- ket, Central Chicago at 85.9 percent, showed a differential of 7.3 percent as seen in Table 8.8.
We can also see variations in the Chicago market when
looking at rental rate comparisons of climate-controlled versus non-climate-controlled units in Table 8.12 and 8.13 on page 100.
Table 8.8 – Chicago Metro Area Occupancy Comparison (2015 Q2)
Submarket
Metro Name Chicago METRO
Central Chicago South Cook County
Glendale Heights/Schaumburg/Palatine Downers Grove/Woodridge/Lisle Aurora/Naperville/Wheaton Oak Park/O'Hare/Wheeling Glenview/Evanston Far West Suburbs Lake County
Joliet/Far Southwest South Shore
National Average 2Q 2015
Occupancy Rate 89.6% 85.9% 90.2% 91.3% 86.0% 92.2% 88.9% 89.1% 91.9% 92.0% 93.2% 89.1% 90.2%
Source: © 2015 REIS, INC.
Table 8.9 – Chicago Metro Area Occupancy Comparison (2014 Q2)
Submarket
Metro Name Chicago METRO
Central Chicago South Cook County
Glendale Heights/Schaumburg/Palatine Downers Grove/Woodridge/Lisle Aurora/Naperville/Wheaton Oak Park/O'Hare/Wheeling Glenview/Evanston Far West Suburbs Lake County
Joliet/Far Southwest South Shore
National Average 2Q 2014
Occupancy Rate 90.3% 88.2% 88.9% 90.8% 91.7% 93.9% 89.4% 92.5% 90.1% 93.5% 91.0% 88.1% 89.1%
Source: © 2015 REIS, INC. 2016 Self-Storage Almanac 99
While the rent for a non-climate-controlled 5-by-5 unit in Chi- cago came in at $48.31, the South Shore metro area saw a high of $63.15 with the Far West Suburbs drawing the lowest rent for this unit size at $35.66. (See Table 8.10.) The same pattern can be seen for 5-by-10 units with the South Shore bringing in the high- est rates at $101.55, the Far West Suburbs seeing a low of $53.19, and Chicago falling in between at $74.32. As a matter of fact, the Far West Suburbs show the lowest rates across the board for all non-climate-controlled units with the exception of 10-by-20 units ($142.05), for which size the Joliet/Far Southwest metro area saw a slightly lower rate of $140.65.
When comparing the 2Q 2014 numbers with 2015, we can see
some similarity in trends for non-climate-controlled facilities in Tables 8.10 and 8.12 on page 100 and 101. The Far West Suburbs,
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