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May 31, 2023
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San Jose, Los Angeles and San Diego Ranked as Three of the Top Five Undersupplied Markets for Self-Storage Facilities


New York, San Jose, Los Angeles, San Diego and Baltimore rank as the top five undersupplied markets when it comes to self-storage facilities according to a new report from the Self Storage Valuation Group at CBRE Valuation & Advisory Services. Portland is #6 on that list.

The report ranks market conditions overlaid with a scoring model based on occupancy, income, and cap rate data in top Metro markets based on REIS data, along with cap rate data from the CBRE 2Q Investor Survey. The result is a ranking of top Metro Markets for self-storage, segmented among top performers and market conditions (under-supply, over-supply, or equilibrium).

“Growth in employment and population has resulted in increasing rents and high occupancy for this product type. While investor demand is strong with historically low capitalization rates and record pricing, there have been very few properties listed for sale over the past year,” said Jeff Grose, Senior Managing Director of CBRE’s Valuation & Advisory Services Group in the Pacific Northwest. “Most owners are experiencing strong year over year growth in net operating income.”

Cara Nolan, Vice President of CBRE’s Portland office, represented multiple developers on at least eight land parcels in the past year that will be resulting in five new facilities either under construction or delivered shortly to the Portland and Vancouver, WA markets. “Portland has been on the radar of many self-storage developers as a direct result of our population growth and density,” Nolan said. “In addition, Portland’s active lifestyle and culture necessitates additional storage, especially as living quarters are decreasing in size. Currently, we are under negotiations for multiple other sites on behalf of the developers that are looking to meet the demand for Portland’s requirement.”

Among the markets identified in the report as having too much self-storage supply are: Oklahoma City, Memphis, Columbus, Kansas City, Salt Lake City, Houston, Dallas and Seattle. Market conditions are determined by CBRE’s proprietary econometric model that compares existing supply per person to four demographic variables: population, percent of renters, average household size and average household income.

“Analysis by major Metro Markets can be useful for comparison from a national perspective but these metrics should not be relied upon for local area analysis. Factors that affect local self-storage product type include zoning regulations, local demographics, household income and density, among others,” said Christian Sonne, CRE, Executive Vice President of CBRE’s Self Storage Valuation Group. “The best analytics for this sector are by local trade area. From our Investor Surveys and zip code studies of existing facilities, it is clear the trade area for self-storage is relatively small, generally within a three-mile radius for a typical suburban property.”

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