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Wednesday, 11 December 2019
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Agent Resource Center

The Self-Storage Sector Is Still Booming in Las Vegas, Contrary to the National Trends

Written by Posted On Wednesday, 13 November 2019 23:23
The Las Vegas self-storage sector is booming The Las Vegas self-storage sector is booming Shutterstock

The self-storage industry is facing a series of setbacks nationwide, due to the high supply that determined a drop in street rates in almost all major markets. The average monthly rate for a 10X10, non-climate-controlled storage unit was $115 in September 2019, according to Yardi Matrix, a 2.5% decrease compared with the same month of the previous year. The rates contracted even more, by 3.7%, for climate-controlled units of the same size.

The sharpest decline was registered in Charleston, with a contraction of 10% for the non-climate-controlled 10X10 units, while the rates for the non-CC, 5X5 units dropped by 12%. Other metros that registered significant corrections of self-storage street rates are Pittsburg, Portland and Tampa. The downward trend is likely to continue nationally, as it appears that new facilities are being built regardless of demand.

Self-Storage Street Rates Going Up in Las Vegas

As difficult as swimming against national trends might be, one glaring exception is beating all the odds: the Las Vegas self-storage sector! The metro area registered self-storage street rates growth during the past 12 consecutive months, from $102 in September 2018 to $107 in September 2019 for the standard 10X10 units. The 5% y-o-y positive evolution of the 10X10 units is accompanied by rate increases for other types of units too: 6% for the 5X10, non-CC units, and 2% for the 10X10 climate-controlled ones.

Despite the recent street rates increases, Las Vegas remains a rather friendly market for self-storage renters. The monthly rate for a standard 10X10 unit, at $107, is still below the national average of $115. The affordability of the Las Vegas self-storage sector becomes even more apparent when we compare the street rates here with other metro areas.

The San Francisco self-storage market is the priciest nationally, with an average monthly rent for a standard 10X10 unit of $193, followed by the Los Angeles self-storage market with $183, and the San Jose self-storage market, with $175 per month.

With plenty of new storage options entering the market, Las Vegas is expected to retain its decent price points and maintain a healthy balance that’s ultimately a win-win for both investors and consumers. Moreover, this relatively stable market is good news not only for locals with too little storage space at home, but also for the people moving to the area – in the last decade, Las Vegas attracted tens of thousands of new residents.

Californians Are Flocking to Sin City, and Not Just for the Weekend

Las Vegas became a popular destination not only for tourists looking for a few days of fun, but also for families searching for a new place to live. Las Vegas-Henderson-Paradise metro now boasts a population or more than 2.2 million, according to the latest data from the US Census. From 2010 to 2017, the area gained 166,000 new residents, representing a change of 13%, significantly above the national population growth rate during the same period – 5.9%.

The people with the most enthusiasm about moving to the Las Vegas metro area appear to be Californians, and particularly the residents of Los Angeles County – about 14,200 people moved from there to Las Vegas metro between 2010 and 2017, which represents almost 10% of all the moves. Looking at potential reasons for this migration trend, the first thing that catches the attention is the cost of housing. According to RENTCafé, the median rent for an apartment in the Los Angeles metro area is $2,556 as of September 2019, while the average monthly rent for an apartment in Las Vegas is less than half – only $1,104.

Things look pretty positive in terms of employment too: the Las Vegas metro area added almost 22,000 new jobs in the past 12 months alone, according to the Bureau of Labor Statistics.

New Self-Storage Construction Maintains a Steady Flow in Las Vegas

The Las Vegas metro area has, according to Yardi Matrix, about 273 self-storage facilities with over 20 million square feet of space in total inventory. The sector keeps expanding – another 27 properties are planned or under construction and will contribute to the inventory with an additional 1.8 million rentable square feet of storage space.

The new construction tempo has picked up a little in the last few months, with the quantity of planned and under-construction properties as a proportion of the total inventory rising from 7.6% in July 2019 to 10.2% in both August and September 2019. However, the percentage hovers around the national average of 9.4%, which means that new deliveries are not expected to hamper the evolution of Las Vegas self-storage street rates too heavily.

A combination of factors – the high inbound migration that increases self-storage demand and a consistent yet not excessive supply of new facilities – create a rare “sweet spot” in Las Vegas, where renters, self-storage operators and self-storage developers are all gaining: a triple-win situation, so to say.  Renters here are advantaged by street rates significantly under the national average, facility operators can breathe easy knowing that they’re doing business in the only US market that registers notable rate increases, while developers still have room for growth.

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Diandra Stieger

Diandra is a creative writer for STORAGECafé.com. With an academic background in English literature and linguistics, Diandra has a strong passion for real estate. She covers a variety of topics, from marketing trends to entertaining articles about urban development. When she’s not catching up on the latest real estate deals, she’s usually busy traveling, reading, or learning new languages. You can get in touch with Diandra via email.

https://www.storagecafe.com/blog/
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