Key takeaways: Recent data from the U.S. Department of Commerce for March 2021 including Nov. 2020-Feb. 2021 revisions shows very sharp and accelerating Y/Y declines in the value of new mini-storage facilities being placed into construction beginning EOY 2020. March pace picked up modestly on a sequential basis, but the last seven consecutive prints read -6.4%, -8.6%, -5.9%, -11.2%, -19.9%, -22.5% and -19.3% on a Y/Y basis. Seasonally the amount of starts troughs in December / January and picks up through the spring and into the summer months as weather improves, so the Y/Y numbers tell a better story. It will be interesting to monitor the ROC as we being lapping COVID comparisons, as the data through March is no doubt being impacted by restrictions / limitations on construction activities in certain markets versus a year ago.
As we all know storage supply data is notoriously hard to obtain, and what really matters are localized supply additions within a 3-5 mile radius of existing facilities. But the data does appear to dovetail, however, with the narrative from REIT management teams that the supply environment is becoming more rational than the past ~4 years, with new openings in 2021 probably looking similar to 2020 followed by fewer deliveries in 2021 and 2022. Street rate pricing is trending up well into the double digits in many markets, and further declines in new supply additions should further support the long-term pricing picture for operators with seasoned portfolios.
Figure 1:
Source: U.S. Department of Commerce
