Image commercially licensed from Unsplash
Summary: StorageMart, a global self storage company, has released their in-depth research on supply and demand in the self storage sector and the current state of storage in Manhattan.
StorageMart, a global self storage company, has released an in-depth research report on the supply and demand in the self storage sector and the current state of storage in Manhattan. The findings of the study reveal that the traditional approach of measuring market saturation based on square feet per capita is outdated and inaccurate.
Conventionally, market saturation has been assessed by square feet per capita. Today, the Self-Storage Almanac suggests that the national square foot per capita is 6.07. Anything above this number could be considered saturated. With 3.24 square feet per capita, Manhattan would appear to be an undersupplied market. However, this simplistic analysis fails to consider the demographic nuances of consumers.
To truly understand market saturation, the study compares Manhattan to Boise, a market with 18.24 square feet per capita, which would typically be considered oversaturated. However, the research from StorageMart challenges this notion and argues that a focus on units per capita provides a more accurate representation of market saturation. Using units per capita, both Boise and Manhattan have similar supply numbers with 0.11 and 0.09, indicating high saturation in both markets. This metric takes into account the total number of storage units in an area divided by the population.
Further analysis reveals that the average size of a storage unit in Boise is 151 square feet compared to only 32 square feet in Manhattan. This difference is attributed to the larger homes and properties in Boise, where residents require more storage space for items like outdoor equipment and furniture. In contrast, Manhattan residents, living in smaller apartments, have limited storage capacity and fewer possessions, necessitating smaller storage units.
Despite having a population half the size of Manhattan, Boise has four times the facilities and more than double the total square footage. Operators in Boise report occupancy levels in the mid-90% range, while in Manhattan, occupancy is in the mid to low 80% range. This disproves the assumption that square feet per capita is an accurate indicator of supply and fails to acknowledge the differences in customer demand.
In fact, Manhattan sees the addition of ten small units for every large unit built. Manhattan Mini Storage estimates that closet vacancy can run as high as 35% in the city, while overall occupancy is at 85%.
Despite the already large supply of storage units per capita in Manhattan, more storage facilities are set to open by 2024. This oversupply will further saturate the market and lead to a reduction in asking rates. CEO of StorageMart, Cris Burnam, warns, “It’s tempting to convert empty space, but the numbers don’t work. Asking rates in Manhattan are at a low, and Occupancy is suffering due to over supply.”
The market asking rate per square foot saw a drop ranging from 28-34% from 2022 to 2023, which worsened when 240,000 square feet of storage units were placed on the market by REITs, leading to a further decrease.
Even though there is already a large supply of storage units per capita in the region, there are still more that will be developed. By 2024, the Manhattan area will gain four more storage facilities that will contribute over 700,000 total square feet with an additional 20,000 units set to open in the next three years. With this oversupply of storage facilities slated to open in Manhattan it will only oversaturate the market even further.
While Manhattan is still a viable marketplace with tens of thousands of storage users, the overwhelming supply is eroding market fundamentals. If there is further influx of storage square footage from office conversions, the market will deteriorate even further. The temptation of office space conversions cannot outweigh the current market situation. The cost of conversion will only intensify competition in an already oversaturated market.
