Despite the pandemic, demand for self-storage units continues to be strong, prompting new construction and more competitive pricing last year, according to a new report by self-storage analytics firm Yardi Matrix.
While construction slowed from 2019's brisk pace, self-storage companies still added 1.2 million square feet of storage space in the metro area last year.
That compares with 1.7 million square feet of storage added in 2019, the year the region recorded its highest such construction activity in four years, Yardi's report said.
More recent openings include Lock Up Self Storage in Anoka, Five Star Storage in St. Paul and Metro Storage in Coon Rapids.
The metro now has 18 million square feet of self-storage unit space. The recent surge places the Twin Cities as the ninth-largest storage market in the country, Yardi reported.
In 2021, builders expect to construct seven more self-storage facilities, adding another 504,000 square feet across the Minneapolis, St. Paul and Bloomington area, the report found. "Construction has continued on an even keel throughout the year, even though it didn't keep the momentum that many markets had in 2019."
Yardi senior marketing writer Francis Chantree said "life-altering events like moving and downsizing" are fueling the demand, along with businesses forced to reorganize work environments. Those changes "allowed the industry to ride out the pandemic-induced challenges better than most," he said.
Doug Ressler, Yardi's business intelligence manager, noted that self-storage developments have also been pushed by migration of some Gen Z-ers and millennials who moved back home with parents during the pandemic.
COVID aside, there has been a swell in storage units rising near newly constructed apartment buildings and senior-housing complexes, Ressler said. "The data makes the business case that people want their storage close and available," whether that is in Minneapolis, Midtown Manhattan or Los Angeles, he said.
Ryan Ferry, an assistant manager at the 4-year-old Lock Up Self Storage facility in Minneapolis agreed storage-unit demand was growing even before the pandemic pushed businesses and residents into difficult circumstances.
Baby boomers are downsizing. People were relocating jobs. "And people just have a lot more stuff. So this storage industry has been becoming bigger," Ferry said. When areas such as Anoka didn't have a lot of storage services, Lock Up's owners decided they would open a facility and fill a need for area residents, Ferry said. That location opened last year, giving Lock Up Self Storage six locations in the Twin Cities and roughly 40 nationwide.
In July, Illinois-based Metro Storage started building its ninth Twin Cities storage facility in Coon Rapids. That three-story, 130,000 square foot facility will be completed this year with 908 units. The price tag is estimated at around $9 million, Metro Storage CEO Blair Nagel said when first announcing the project.
Metro Storage now controls 848,290 square feet of self-storage units in the Twin Cities — enough to claim the fifth-largest rank in the area.
According to Yardi Matrix, the largest four companies include California-based Public Storage, which controls 5.6 million square feet followed by Brooklyn Center-based Nationwide Housing Corp., which controls just over 1 million square feet.
Utah-based Extra Space Storage and Arizona-based AMERCO Real Estate rank third- and fourth-largest.
The uptick in storage facilities in recent years boosted competition. Yardi found Twin Cities storage prices dropped 5.9% last year. That was "the highest price drop among the Top 10 markets," said Mirela Mohan, senior editor at Yardi's StorageCafé division.
Today, rents average $108 a month per unit, down $5 from 2019.
Ressler noted that lower-income levels may have also affected pricing for self-storage units. As COVID raged, so too did layoffs and furloughs across the restaurant, retail, hotel and office industries. With income constraints, people go "where they can get better rates," he said.
Dee DePass • 612-673-7725