Top 5 Secondary Markets for Self Storage Development
- Jul 09, 2020
While primary self storage markets have become oversupplied and have largely provided limited opportunities for new development, industry players have been determined to shift their focus to secondary markets.
With demographic trends positive throughout most of these next-tier markets, demand for storage space has increased. As of May, there was more than 44 million square feet of self storage space under construction or in the planning stages in secondary markets across the country—more than double the 20 million square feet recorded in the same period in 2019, according to Yardi Matrix data.
Despite initial forecasts that the global health crisis would significantly slow development activity across the country, the vast majority of self storage projects continued to move forward. We have identified the top five next-tier markets based on underway and planned projects as a percentage of total inventory, using Yardi Matrix data.
5. Worcester-Springfield, MA
Following a year with only three new deliveries, development activity picked up the pace in the Worcester-Springfield market. As of May, there were five projects under construction and nine in the planning stages, totaling more than 1 million square feet. The new-supply pipeline accounted for 18.9 percent of the market’s total inventory. With a completed stock of 5.5 million square feet, the market has only 4.1 net square feet of storage space available per capita, below the 6.5 national figure.
A cluster of projects underway is located alongside interstates 190 and 290, providing easy access to downtown Worcester and the entire Worcester-Springfield market. The market also has several conversion projects in the pipeline, such as the Life Storage-branded 92,410-square-foot facility in Springfield, a redevelopment of a former industrial facility originally constructed in 1974. The asset is slated for completion by this fall.
4. Rochester, NY
With moderate construction activity in previous years, Rochester had some 684,000 square feet of storage space under construction and in the planning stages as of May, representing 19.5 percent of existing stock—a significant uptick compared to the 7.6 percent recorded in May 2019. The city has a self storage stock of roughly 3.5 million square feet. Its per-person inventory is 4.1 net square feet, below the national average.
There are currently two CubeSmart redevelopment projects 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.
3. Knoxville, TN
Knoxville has been steadily growing over the past few years, having gained 13,313 residents in 2018, up 1 percent year-over-year and 40 basis points above the national average. Multifamily completions have also picked up in recent years, underscoring demand for self storage.
In line with other next-tier markets, the self storage new-supply pipeline grew significantly, from 265,675 square feet in May 2019, to more than 1 million square feet as of May 2020. There were nine projects under construction and seven in the planning stages, accounting for 22.7 percent of Knoxville’s total stock.
2. Providence, RI
After a decade of very limited deliveries, Providence had some 1.4 million square feet of storage space under construction and in the planning stages as of May, accounting for 24.2 percent of existing inventory. The city had a total of 18 projects in the pipeline, 14 in the planning stages, and four under construction that are expected to be completed by the end of this summer.
Providence has a completed inventory of more than 5.7 million square feet and only 3.9 net square feet of storage space available per person, well below the national 6.5 average. Low inventory and slow but steady population growth (up 0.3 percent year-over-year in 2018) indicate that the city has room for new self storage projects.
1. Augusta, GA
When it comes to the share of space underway as a percentage of existing inventory, Augusta ranked first with six projects under construction and seven in the planning stages, totaling more than 1 million square feet. The new-supply pipeline represented 24.5 percent of existing inventory, as of May, up 180 basis points month-over-month and 18.7 percent year-over-year.
Although Augusta’s population is growing, the supply per person is 8.9 net square feet—above the national figure—with new constructions underway that could push the market over the 11-square-foot mark. Currently, the largest project underway is a 175,000-square-foot, multistory facility located at 3497 River Watch Parkway, one of the first multistory indoor self storage facilities in Augusta, slated for completion by July 2020.