Development activity around the country is starting to slow down. The slowdown in supply added can be attributed to the macroeconomic climate that has created unfavorable conditions for development. With interest rates skyrocketing to combat inflation, big banks have made it hard for developers/investors to secure lending. Self Storage investors may opt to acquire and add value to existing facilities with a history of running a successful business, as opposed to building a facility from the ground up. Limited availability of construction financing combined with uncertainty around the recession we are in have slowed down ground up construction projects for new facilities.
Data reported from Radius+ shows that there's over 3000 facilities in the development pipeline, with close to 62% in the planning stage, and 25% in the permitted phase. The last 13% of the development projects are in the under construction phase, which would add an additional 1.4% of total square footage once they complete.
In 2019 an additional 3.7% square footage of storage was added, that amount dropped to 2.5% in 2020 and continued to drop to 2.1% in 2021 and dipped even further to 1.5% square feet in 2022 YTD. In 2020 there were 824 self-storage deliveries, which was higher than the 689 deliveries reported in 2021, while there were only 463 new facilities built in 2022 so far. In each year over half of the deliveries were from the top 50 markets.
Sourced from Radius+ data.