Top 5 Northeast Markets for Self Storage Development
- Sep 17, 2020
Despite the coronavirus-induced economic stress, and with construction being halted for the entire lockdown period, the self storage new-supply pipeline has not diminished in the Northeast. As of July, some 25.3 million square feet of storage space was under construction or in the planning stages across the region, representing 14.4 percent of existing stock—significantly higher than the 8.9 percent national rate.
As high barrier-to-entry markets, such as New York City and Boston, are becoming increasingly competitive and providing limited opportunities for new development, industry players have shifted their focus to secondary markets. Therefore, it comes as no surprise that four of the five metros ranked are next-tier self storage markets. The table below highlights the top five Northeast markets for underway and planned projects as a percentage of total stock, using Yardi Matrix data.
5. Allentown–Bethlehem, PA
Thanks to its proximity to New York City and its healthy employment market, the Allentown-Bethlehem metro has grown in the past few years. Despite moderate construction activity in previous years and coronavirus-related restrictions, the metro had some 615,100 square feet of storage space under construction or in the planning stages as of July. The new-supply pipeline represented 18.1 percent of the market’s 3.4 million square feet of inventory.
The metro had nine projects in the pipeline, seven in the planning stages, and two under construction—a ground-up and a conversion project. An Easton, Pa., private investor acquired a former bowling alley for nearly $2 million, according to public records, to convert it into a 44,704-square-foot storage facility. The asset was originally built in 1992.
4. Albany, NY
Albany’s storage inventory has been gradually growing over the past decade. Last year, the metro reached a new cycle peak in completions—a total of 584,032 square feet of storage space came online. As of July, Albany had 866,600 square feet of self storage space underway or in the planning stages, accounting for 18.1 percent of existing inventory. The city has a self storage stock of roughly 4.8 million square feet.
A cluster of projects in the pipeline is located alongside Freeway 5, providing access to downtown Albany and Schenectady. The market has 11 projects in the planning stages and three under construction. Most of the projects are ground-up developments, except a U-Haul branded 285,000-square-foot facility—a redevelopment of a former industrial building originally constructed in 1940. The facility is slated for completion by December.
3. New York City
Although New York City has the largest self storage inventory nationwide—encompassing more than 66.3 million square feet—the supply per person is merely 3.4 net square feet, well below the 6.6 national average. As of July, projects under construction or in the planning stages accounted for 18.4 percent of total stock, up 40 basis points month-over-month. There were 97 developments planned and 64 under construction, totaling 12.2 million square feet.
The metro’s new-supply pipeline, however, is expected to shrink in the coming months due to recent changes made to the city’s Industrial & Commercial Abatement Program, which grants tax exemptions for ground-up and conversion projects as well, according to GlobeSt. As a result, many storage facilities won’t be eligible for tax abatement, which will make building them unprofitable.
2. Rochester, NY
Following a year with only three new deliveries, development activity accelerated in Rochester. As of July, the metro had three projects under construction and nine in the planning stages, totaling 801,200 square feet. The new-supply pipeline accounted for 22.4 percent of the market’s total inventory. With a completed stock of 3.6 million square feet, the market’s per-person inventory is around 4.1 net square feet, below the 6.6 percent national figure.
Rochester also has several conversion projects in the pipeline, including two CubeSmart-branded facilities currently underway—an approximately 105,000-square-foot facility located at 1771 Brighton Henrietta Town Line Road and an over 200,000-square-foot building at 900 Linden Ave. Both projects are former industrial buildings, originally developed in 1991 and 1970, respectively.
1. Providence, RI
Providence tops our list, with more than 1.3 million square feet of storage space in the new-supply pipeline, representing 22.9 percent of existing stock. The city had 17 projects in the pipeline, 11 in the planning stages, and six under construction that are slated for completion in the fourth quarter.
The metro has a completed inventory of more than 5.7 million square feet and only 3.9 net square feet of storage space available per capita, below the 6.6 national average. Low stock and favorable demographic trends will likely continue to provide opportunities for new storage developments.