The self storage industry has been booming over the past decade, adding 25% of the total inventory nationwide. Despite a brief slowdown during the pandemic, 2023 saw the addition of 53 million square feet of new space, with 2024 projected to contribute another 54 million rentable square feet. This surge in construction activity is driven by robust and growing demand within the sector.
The six D’s driving self storage demand
Self storage demand is now fueled by six key factors: death, divorce, dislocation, downsizing, decluttering, and distribution. Historically, the first four Ds were the primary drivers behind the need for self storage. However, in recent years, new avenues of demand have emerged.
The shift towards remote work has increased the need to declutter living spaces to create home offices. Various items, ranging from holiday decorations and sports equipment to collectibles and extra furniture, are commonly relocated to storage units to ensure they are kept safe until needed.
Additionally, the rise of e-commerce has significantly boosted the self storage industry. Small businesses, in particular, value the flexibility and affordability of self storage for inventory management before shipping products to customers. Moreover, the growing popularity of recreational vehicles (RVs), especially during the pandemic, has further contributed to the demand for self storage. When not in use, these vehicles need a dedicated space for safekeeping, and self storage facilities often provide the most suitable option.
Where is there further potential for growth in the self storage market?
Many primary markets have seen their inventories expand significantly in recent years, with some raising concerns about potential oversaturation. In contrast, other areas lag with notable gaps between supply and potential demand. Several regions in New England, as well as western and midwestern hubs, are largely underserved, presenting intriguing opportunities for developers. This insight comes from a recent RentCafe Self Storage Study, which analyzed the largest 150 U.S. metro areas to identify where self-storage development is most needed. The study considered 25 factors, including local storage space per capita, online search interest, population growth, urbanization, housing trends, and car ownership rates.
Interestingly, seven of the top 10 underserved cities for self storage are tertiary markets, or metro areas with populations under 2 million people. While primary markets like Phoenix, Los Angeles, and Philadelphia may still benefit from new storage space, it’s the smaller markets that are seeing a growing need. As people move away from large cities and settle into these smaller areas, which generally lack self-storage, population growth is driving up demand and creating opportunities for positive absorption.
New England tops the list nationally for storage potential with significant demand and low supply
New England metros are primed for self storage growth due to their strong economies, dense housing, and diverse lifestyle options.
Leading the pack is Springfield, MA, which has a substantial gap between supply and demand. With only 3.7 square feet of storage space per person and a population growth of 10.8% in the last decade, the area can benefit from more storage options. High housing density and smaller apartments are making extra storage space a hot commodity. Local interest in the sector appears to be high, with over 755 Google searches per 10,000 residents related to self storage services.
The Providence-Warwick, RI-MA, metro area also emerges as a hotspot for self storage development potential, showcasing strong growth indicators for the sector. The existing self storage inventory in this area stands at a modest 4.8 square feet per person. Additionally, the area hosts nearly 92,000 college students, further increasing the need for temporary storage facilities.
Worcester, MA-CT, and Boston, MA, show great promise for future self storage development due to high population mobility, dense housing, and large numbers of remote workers and college students. The Worcester metro area currently offers only 5.4 square feet of self storage per capita, significantly below the national benchmark of 7.1 square feet.
Boston is teeming with potential for self storage growth, with the metro area currently providing just 4.7 square feet of storage space per capita. As a vibrant urban hub, Boston experiences significant population mobility and has one of the highest housing densities in the nation. The demand for storage is further driven by over half a million remote workers and more than 350,000 college students.
Multiple cities in Colorado and Arizona, primed for self storage development
Population growth and outdoor-oriented lifestyles are fueling development potential in the Mountain West, with metro areas such Boulder, CO, Denver, CO, and Phoenix, AZ, standing out as major locations for self-storage expansion potential.
Boulder ranks third for self-storage development opportunities nationwide, driven by a transient population of students and professionals and an active lifestyle that requires storage for seasonal gear. With almost 1,000 online searches for self-storage per 10,000 residents, demand is robust despite current inventory levels almost in line with the national benchmark.
Denver-Aurora-Lakewood shows appetence for more storage options as well, mainly due to its robust home construction sector. In 2023 alone, over 20,000 new housing units were permitted. On top of that, nearly 400K remote workers and 150K college students who often depend on self-storage live here.
Phoenix, AZ is a primary market that’s worth watching, thanks to its booming job market and affordable living costs. The metro area has experienced a 14% population increase and a 22% rise in households over the past decade, creating a strong demand for self-storage. With around 1,200 monthly searches per 10,000 residents for storage options, Phoenix is poised for growth in the self-storage sector.
Ann Arbor leads the Midwest’s list of cities in need of more storage solutions
Self-storage development potential in the Midwest is surging, driven by growing urban and suburban populations, the region’s many educational hubs and its diverse climate. Seasonal temperature fluctuations in the area necessitate storage solutions for items like outdoor furniture, tools and equipment, and delicate belongings. This combination of demographic trends and climate needs makes self-storage a vital service in the Midwest.
Ann Arbor, MI, ranks seventh nationally as a high-demand area for self-storage, with about 5.4 square feet of space per capita and approximately 740 monthly Google searches per 10,000 residents. Population and household growth over the past decade, coupled with a large student population, drive this demand. Students represent about a fifth of Ann Arbor’s residents, contributing significantly to the need for storage solutions.
Minneapolis-St. Paul-Bloomington, MN-WI, ranks eighth with 6.5 square feet of storage space per capita, slightly below the national average. The area has seen significant population and household growth, with nearly 18,000 building permits issued in 2023 alone. This active housing market and the prevalence of multi-car households drive the demand for additional storage space.
The self storage industry shows considerable promise, particularly in small and medium metro areas in New England, as well as the West and Midwest. These regions present prime opportunities for development, characterized by low inventories and high demand. The combination of constrained supply and rising need makes these locales attractive for the next wave of self storage investments.
