An Analysis by Cody Bond
SELF STORAGE IN THE AGE OF COVID-19
The national vacancy rate for the self storage sector (which includes both climate and non climate-controlled units) declined 70 basis points over the second quarter, coming in at 14.2%. Though down from last quarter’s high of 14.9%, the rate remains 160 basis points higher than where it was in the second quarter of 2019. Vacancies in this sector have not reached above 14.0% since the first quarter of 2013 when the rate was 14.7%. Some of the decrease in vacancy seen this quarter could be attributed to standard seasonality for this property type, but it is likely that this property type is also benefiting from an increased need to store and amass COVID-19 necessities, as well as students’ belongings for those who were sent home early from college last spring.
National Occupancy Rates (50 Metropolitan Areas)
Source: Moody’s Analytics REIS
On the other hand, distress was evident in rent growth across all regions and unit types, with year-over-year rents for 10×10 non-climate-controlled units declining by 5.4%, which surpassed the prior quarter’s 3.9% drop – a record decline at the time. On a quarterly basis, national rents for 10×10 climate and non-climate-controlled units fell by -1.5% and -0.9%, respectively, over the second quarter. The Northeast and South Atlantic regions suffered the heaviest losses, with 10×10 non-climate-controlled rents falling by 7.0% and 7.3% over the year. Once more, these are record drops for the specific region. The West, the top performer of the regions, still saw rents decline by -3.7% year-over-year.
Cody Bond is an Associate Economist within the commercial real estate division of Moody’s Analytics.