Is Basement Concentration the overlooked metric in self storage analysis?
Industry participants like to use 7 square feet per capita as the rule of thumb for self storage saturation. As we have discussed before, the number is actually 5.5 across the country; however, there is more to the story, further diluting the importance of using a rule of thumb.
Supply of self storage differs significantly across the country. Of the top 50 markets, the New York CBSA has the lowest per capita level of supply at 2.75 while Boise City, ID has over 12 feet per capita. Given the magnitude of variation it is clear that each market needs its own framework for analyzing supply/demand balance and basements shed some light on developing that framework.
Basements as an alternative to self storage
New homes are now building basements as livable spaces; however, before this recent trend the basement served little use beyond washer/dryer and storage. It is a logical conclusion that homes with basements serve as a substitute for self storage needs. What is particularly interesting about basements is that they are not widespread. In fact, the foundation of a house differs significantly across the country based on geological features. The Northeast has the highest concentration of basements at 87% while there are virtually no foundations with basements in Texas.
Geology has had a clear impact on the self storage industry. Regions with greater concentration of basements have far less storage per capita and vice versa. While the correlation isn’t perfect, this relationship lends important insights when running a feasibility study. Comparing square footage per capita of a project in Dallas to one in Boston will definitely not lead to the correct conclusions.
We would encourage developers and investors to analyze the concentration of basements in their micro region to provide greater context to the square footage per capita metric.
Union Realtime utilizes innovative tech solutions to deliver self-storage data and analysis. We specialize in high quality data-driven analytics for the self-storage industry. Our technology provides the industry with the most accurate self-storage development supply information available, and now provide that same accuracy with self-storage occupancy data along with market reports and self-storage statistics — updated daily.
For more information, please reach out to:
Cory Sylvester • Principal
cory@unionrealtime.com
(646) 883–9427
