As new self-storage developments continue to break ground in cities across the country, some real estate developers are met with concerns of oversupply in many of the top markets. Construction of new supply has now shifted to secondary and tertiary markets where the supply has been lower even during the construction boom of recent years.
For this analysis, we look at a primary, secondary and tertiary markets in Colorado. According to research firms, in 2018, the amount of rentable square feet in the Denver metro area increased by 23 percent, with the addition of 37 new facilities to the market. It’s no surprise here that Colorado developers are looking into markets outside of the metro areas to build new supply. We take a look at the rates in these markets to see how the construction of new supply has impacted rates in the area.
Average Monthly Rates – 10×10 Standard Units
Below is an analysis of rates over a 24 month period for four Colorado markets – Denver, Colorado Springs, Fort Collins and Pueblo. The analysis considers rates over time for 10×10 standard units (non climate controlled). Denver, Colorado Springs and Fort Collins rates have all consistently trended in the same direction. Not surprisingly, rates in Colorado Springs were 5 percent lower, while in Fort Collins they were 13 percent lower, and in Pueblo, which is in a tertiary market, rates are 41 percent lower. Rates in Pueblo, where the construction of new supply has not quite taken off yet, have been flat over the 24 month period. Rates in the other three markets, have been trending downward. It can be inferred that rates in the primary and secondary markets have trended downward due to new competition entering the markets, driving rates down.
For more in-depth analysis of these markets, or any other markets, visit www.StorTrack.com