September 2017, year-on-year self-storage rate trend differences across the major MSAs

As investors and owners in self-storage continue to look for opportunities for growth and acquisition, one critical insight that helps this process is studying how storage rates are changing in any given area. Rising rates indicate demand outstripping supply while falling rates indicate the opposite.

For example, if we look at year-on-year rates in the top 20 Metropolitan Service Areas in the USA and run a quick comparison of average rates of small units in September 2016 and compare that with September 2017, we see some interesting differences between areas of the country;

For regular small units (units sized up to 6×6 and without climate control) we see the following for regular advertised rates (the chart also shows the population change over the last 10 years);

Riverside-San Bernardino, the 13th largest MSA in the country, saw the biggest year-on-year increase in average small unit rates in September 2017 (compared to the same month last year). At the other end of the spectrum was Chicago-Naperville with the largest decrease in average rates on the same month last year. The online rates tell a similar story:

Again, Riverside-San Bernardino shows the highest increase, while Chicago-Naperville is back in the basement again, this time only beaten by Dallas-Fort Worth for the largest decrease in comparable rates.

Taking a closer comparative look at these two MSAs, we see very different trends for average monthly rates across the last two years – the following shows regular advertised rates:

In late 2015 small units in the Chicago-Naperville MSA were 25% more expensive on average than similar units in Riverside-San Bernardino. Not only has this gap closed, but now Riverside-San Bernardino is marginally more expensive. The volatility of pricing in the Chicago region shows operators actively trying to find the ‘sweet spot’ in pricing, but ultimately – after a resurgence in mid 2016 – rates have dropped. Another interesting insight is that there is a real lack of volatility in price setting in Riverside-San Bernardino, the rates gradually and steadily rise across the period.

A similar picture is seen with online rates;

Tracking average rates over time is just part of the picture. Inventory withdrawal, price volatility and other factors exhibited by the dynamics of rate changing, as well as externally available data such as merger and acquisition activity, demographic change and other indicators such as housing and shopping mall development give useful and valuable insight into the demand and supply dynamics of each market.

StorTrack’s analytics team is on stand-by to answer any questions about MSA or micro-market dynamics – answers that could mean the difference in a success your growth goals..