Self-Storage Supply & Demand • Section 10 If we just start from a high level, and look at the national


self-storage construction data from the U.S. Census, in Janu- ary of 2017, the value of new self-storage facilities put in place was $226 million. In September of 2017, that monthly figure had increased to $404 million, roughly 79 percent more self-storage was put in place than earlier in the year. With the pace of construction increasingly at such a fast rate throughout 2017, it is likely that the total number of facilities that are going to be delivered in 2018 will be substantially higher than those delivered in 2017. Based on Union Realtime data, we believe that the total increase in supply will be four percent in 2017, with 2018 likely much higher. See Chart 10.3 on the opposite page.


Regions can reach tipping points


with new supply where the incremental new facility can have outsized impacts on the rental rate performance of a


market. Using Houston as an example, in 2017, prior to Hurricane Harvey, a combination of new supply and


slowing demand caused pricing to decline by over 30 percent vs. the prior year through the end of August.


What About 2019? As with the discussion around 2018 vs. 2017, there is a lot of variation in what market participants believe will happen to the pace of new supply deliveries in 2019. As we exit 2017, it is premature to make a defini- tive call on what level of development activity will be in 2019. Instead, we need to focus on the pace of lending and early-stage development activity, which had shown no marked signs of slowing through the end of 2017.


Whether development activity starts slowing in


2019 or later on, we caution builders and developers to understand how supply impacts a market and how a market’s equilibrium can be dramatically impacted from too much supply.


Houston We Had A Problem Regions can reach tipping points with new supply where the incremental new facility can have outsized impacts on the rental rate performance of a mar- ket. Using Houston as an example, in 2017, prior to


2018 Self-Storage Almanac 113


Hurricane Harvey, a combination of new supply and slowing demand caused pricing to decline by over 30 percent vs. the prior year through the end of August. While not every market with a supply problem will see this magnitude of rental rate declines, it underscores the importance of understanding your market.


Understanding Market Data To better understand the various metrics comprising and impacting any market area, the 2018 Almanac in partnership with Union Realtime, have provided snapshots of the Top 10 CBSAs on the following pages. Ranked by rentable square footage as seen in Table 10.1, these summaries provide a real- time holistic view of supply, demand, demographics, pricing, occupancy, promotions, and competition within the market.


The data in these market summaries should be seen as a


starting point, with the understanding that providers such as Union Realtime can drill down to provide even more specific market demographics and details.





1 Los Angeles-Long Beach-Anaheim, CA 2 Dallas-Fort Worth-Arlington, TX 3 Houston-The Woodlands-Sugar Land, TX 4 New York-Newark-Jersey City, NY-NJ-PA 5


Chicago-Naperville-Elgin, IL-IN-WI


6 Atlanta-Sandy Springs-Roswell, GA 7 Miami-Fort Lauderdale-West Palm Beach, FL 8 Riverside-San Bernardino-Ontario, CA 9


Phoenix-Mesa-Scottsdale, AZ


10 Washington-Arlington-Alexandria, DC-VA-MD-WV Source: Union Realtime


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