On tour: self storage in New York City

It's not all high-rise buildings and glamorous retail complexes for the Global Cities Team. Last week, our focus was on self-storage in New York when we visited a number of storage facilities to meet the companies that invest in them


Ben Forster

Ben Forster

Equity Analyst, Global Real Estate

Self storage companies in the US have delivered some of the strongest returns of any real estate sector in recent years, driven by growing employment, high demand and rising rents. This all came to an abrupt end earlier this year as investors feared that new supply could put pressure on new rental rates. Some companies suffered a fall in share price of over 20%.

New York is one such area where the cost of renting a storage facility has been falling. We met with a number of self storage companies – including Extra Space, Public Storage and Cubesmart – to help inform our assessment. 

Strong fundamentals

From a Global Cities perspective, New York and its boroughs have some of the strongest real estate fundamentals in the country, leading to values well above the national average. Its thriving cultural scene and diverse service economy means space is at a premium, something we covered in "Could Brooklyn could be a global city?" 

The past five years have seen strong demand for storage, which many believe to be the result of a 'catch up' following the post-global financial crisis slump. Demand has been supported by a growing population and economic activity, and supply has been slow to keep up. 

Following our visits, we noted a number of positives and negatives: 

What we like  

  • Population density in the outer boroughs is rising as Manhattan becomes increasingly saturated and expensive
  • The existing supply of self storage per capita in New York remains well below the national average1 (2.7 square foot vs 6.8 square foot)
  • Alternative uses (such as residential property) can offer higher development profits and social benefits, whilst tougher planning restrictions should also limit supply growth in the long run
  • Companies are becoming increasingly efficient in marketing new facilities


New York storage is dominated by a few large players: The three companies we toured own the 178 sites pictured

 What we don't like

  • Supply looks set to grow by around 25% between 2015 and 20182. New supply encourages landlords to undercut their competitors, putting prices under pressure and reducing revenue growth
  • New development can cause social tensions as local demographics change 
  • Self storage is seen as a discretionary item by most. Rising rents have spawned a trend for thriftiness among younger groups (as blogs like Brokelyn will attest).   

The verdict?

Whilst new supply always causes disruption for landlords it is important to consider whether the market is over or under-supplied to begin with. We also need to consider the growth in demand.

On both fronts, we believe New York City remains one of the more attractive long-term destinations for investors in self storage. We expect occupancy to remain reasonably stable, with asking rental rates rising again once the new facilities are filled.  

As one of the fastest-growing cities in the US (and the number two position in our Schroders Global Cities Index), we believe that companies establishing a dominant position in New York look well positioned for the future.


Cubesmart facility, Coney Island, Brooklyn 

Public Storage Facility, The Bronx

Brooklyn panorama from storage facility


Note: the sectors mentioned here are for illustrative purposes only and we are not making a recommendation to buy or sell stocks or shares


1. New York Core Based Statistical Area, Self Storage Almanac (2016)

2. Company commentary 

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