The national pipeline is thinner, but it hasn't helped street rates, so don't wait on supply to fix yours. What matters is the pipeline inside your own trade area, and one new store can swamp the national average.
What happened
Yardi Matrix's October report puts new construction at about 43.8 million NRSF at the end of September. That equals 2.1% of existing inventory, down 40 basis points from a year ago, per Modern Storage Media's summary. Subtract the 40 basis points and last September sat at 2.5%.
Rates didn't respond. Advertised rates still fell 1.8% over the year, and every one of the 30 metros Yardi tracks was lower than the month before, the same summary says. Yardi's reason is that stores already open are taking longer to fill and demand is soft. A smaller pipeline doesn't clear the stores that are mid lease-up.
We covered the rate side in our post on the REIT rate cuts and the break-even math in the rate cut break-even post. This one is about supply.
Look at who is funded to wait. SmartStop closed a CAD $200 million bond this week at about 4.32%, maturing in 2031. Its CEO described what the money does:
"We have substantially completed the refinancing of our 2026 debt maturities, materially termed out the balance on our senior revolver, and strategically laddered our debt maturities." (H. Michael Schwartz, SmartStop, via Modern Storage Media)
That's one company, and the release says nothing about its rates. It's still a useful picture of a lease-up competitor with no refinancing deadline to force a discount or a sale.
What it means for your facility
A national percentage tells you little about your street. Here's the arithmetic on a made-up trade area. These are our assumptions, not Yardi's data.
Say your trade area holds 2,000,000 NRSF of existing storage.
- At the national 2.1%, you'd expect 42,000 NRSF under construction.
- At last September's 2.5%, you'd have expected 50,000 NRSF.
- One 60,000 NRSF store going up is 3.0% of the area, 0.9 points above the national share.
So a national pipeline that's shrinking can sit next to a local one that's growing. A single store makes your area look heavier than the country.
Then count what that store has to fill. If its average unit is 100 NRSF, 60,000 NRSF is 600 units to rent. Those renters are the ones shopping your Map Pack listing and your site today. Yardi's point about slow lease-up cuts the other way too, because a store that fills slowly may keep discounting its first-month rent next to you for longer.
Our read: use the national number to size the mood, not to price. If your trade area has no store under construction, you're ahead of the average and have less reason to cut. If it has one, plan for a long lease-up next door and watch your own move-ins, not the headline. Our piece on physical versus economic occupancy shows why filling units at weak rates can still cost you.
What to check this week
- Find every store under construction or permitted in your trade area. Start with your county or city planning records and a map search for storage near your address.
- Divide the NRSF under construction by the NRSF that already exists in the area. Compare it with Yardi's 2.1%.
- For each new store, note the owner type: REIT, institutional or independent. Owners with cheap, termed-out debt can sit in lease-up longer.
- Record each competitor's advertised 10x10 and 10x20 rate and any first-month special. Check it weekly and keep the dates.
- Divide each new store's NRSF by its average unit size. That's the number of move-ins it needs, and it tells you how long it will be in your market's way.
If you'd rather have your rates, Map Pack position and move-ins watched together as a new store opens, that's what our self-storage marketing service does.