Uneven employment growth by market is expected to lead to a choppy recovery in self-storage operations in 2011, according to Marcus & Millichap Real Estate Investment Services. Several coastal markets will likely account for an outsized share of nonfarm payroll expansion, including New York City, Washington, D.C., and the Seattle-Tacoma area.
As more individuals migrate to these areas and downsize residences, indicators of a stronger recovery in self-storage property operations are expected to emerge. Meanwhile, Sun Belt states also are adding jobs at an accelerated pace, but improvements in self-storage operations will remain bifurcated.
Markets without a significant overhang in housing or recently built self-storage properties, including the major Texas cities, will register healthy occupancy gains, predict M&M researchers. Many formerly overheated housing markets, however, are challenged with a supply glut as self-storage builders chase empty houses into the suburbs.
Arizona, Nevada, Florida and the high desert region of California are the areas most at risk of a prolonged downturn.
