California is home to some of the highest rentals rates in the Self Storage industry. According to a study from John Burns Research & Consulting based on the US Census data the state of California has seen a net international and Domestic migration into the state of -218K people YoY from July 2021- July 2022 (not including deaths and births). The Radius+ team took a look to see how this has affected the Self Storage market in the LA metropolitan area.
In 2020 the total supply of the Los Angeles-Long Beach-Anaheim, CA CBSA increased by 1.3%
In 2021 it increased by 1.2% But in 2022 total supply increased by 1.7% and so far into 2023 the total supply has increased by .8% from the start of the year till now. Supply growth in this market seems to be very low, although the slight uptrend in 2022 could continue if development continues at the same rate into the rest of 2023.
While the average price per square foot for storage units in Los Angeles in Q1 of 2022 was $2.43 which dropped by 10.5% to $2.17 in Q1 2023. This seems to be the norm in primary markets as rates stabilize from the all time highs during COVID-19.
The notable exodus of people from the state of CA combined with the lagging supply growth in the Los Angeles-Long Beach-Anaheim, CA CBSA could be an indication that demand has reached a ceiling in the area. The decrease in average price per square foot YoY however was actually less significant compared to the decrease in Miami (14% decrease) and tied with that of NYC (10% decrease) for the same time frame. Important to note as well is that once the current development pipeline in the market completes we can expect to see an increase of supply of over 8.1%. So while development in this dense sprawling market looks to be inching forward compared with other top 25 markets, there are still developers confident that the demand is there.