Top 5 Self Storage Markets for Transaction Activity
- Dec 07, 2020
Nationally, more than 26 million square feet of storage space traded year-to-date through October for a combined $1.9 billion, according to Yardi Matrix. This marks a 41 percent drop-off compared to the same time frame in 2019 when the total sales volume amounted to $3.2 billion.
Overall sales activity slowed down during the first few months due to the health crisis when shelter-in-place orders put pressure on most businesses across the country. However, self storage investment picked up again in July and peaked in August, when a total of 62 properties were sold.
The table below highlights the Top 5 self storage markets with the highest overall transaction volume year-to-date through October, based on Yardi Matrix data. The metros on the list account for a quarter of total investment activity—the Top 3 markets reported a considerable increase in volume this year compared to 2019.
5. New York City
Some 280,000 square feet of storage space changed hands in New York City for nearly $75 million year-to-date through October. Investment this year was substantially lower than in 2019 when a total of $214 million traded during the same period. In the first 10 months of 2020, only two facilities sold for an average of $266.7 per square foot, down from $346.2 in the previous year.
Public Storage’s $48.8 million acquisition of a more than 130,000-square-foot Brooklyn property was the largest deal recorded in the metro through October. The facility was part of a three-property portfolio sale, which included a storage asset in Malden, Mass., and one in New Rochelle, N.Y.
Phoenix saw nearly $80 million in closed self storage deals in the first 10 months of the year. Although buyers remained fairly active throughout the entire lockdown period, with 10 properties sold year-to-date through October, investment activity lost steam compared to the same time frame in 2019, when a total of 18 facilities changed hands for almost $93 million. Nonetheless, the average per-square-foot price was $106.1, which represents a 7.8 percent increase over the same interval in 2019, when the average price was $98.4 per square foot.
Blackstone has expanded its Phoenix footprint with the acquisition of a two-property portfolio encompassing 118,840 square feet. Wentworth Property Co. sold the facilities for nearly $13 million. In October, Blackstone acquired Simply Self Storage from Brookfield Asset Management for $1.2 billion.
Transaction activity over the first 10 months totaled more than $97 million in Nashville, up 58 percent compared to the same period last year. While the total number of square feet sold slid from around 840,000 to roughly 705,000, the average per-square-foot price has increased from $96.1 last year to $137.8 in 2020.
The biggest buyer in the metro was Nicol Investment Co.—the firm paid nearly $30 million for two properties totaling 193,464 square feet. Nicol Investment Co. owns five CubeSmart-managed facilities in Nashville.
2. San Diego
Transaction volume in San Diego amounted to more than $106 million year-to-date through October. Sales activity was significantly higher than the $19 million closed during the same time frame last year. In the first 10 months of 2020, six properties changed hands, encompassing 566,686 square feet.
The heightened investment activity comes as no surprise, as San Diego’s storage market has fared considerably well during recent months. Annual street rate performance was positive for both the standard 10×10 climate-controlled and non-climate-controlled units, up 4.3 percent and 3.9 percent, respectively, as of October. Public Storage was the largest investor in the metro—the REIT expanded its footprint by a total of 261,296 square feet.
Atlanta tops our list with more than $109 million in self storage deals completed year-to-date through October. That is more than double the $52 million traded during the same period in 2019. A total of 15 properties were sold in 2020, comprising more than 1.4 million square feet. However, the majority of the transactions closed in the first quarter of the year, with most self storage facilities trading in March.
The largest influx of capital was recorded in suburban Atlanta, with more than $62 million in self storage assets changing hands. Overall, the biggest investor in Atlanta was CubeSmart—the firm acquired four properties encompassing 379,662 square feet.