There’s another boom going on in Charlotte right now to go along with the city’s apartment-building spree: New self-storage facilities.
They’re under construction on high-profile sites including near Plaza Midwood, on West Morehead Street near uptown, just north of uptown on Church Street. Part of the reason for the growth is a change in city regulations that made it easier to build self-storage in more urban settings, which I wrote about last year. And part of the reason is old-fashioned supply and demand.
A report out this week from Marcus & Millichap highlights the fundamental factors driving the city’s rapidly growing self-storage market. Household formation in Charlotte is increasing and is expected to hit its highest level since 2008, with single-family and apartment builders jumping to keep up with demand.
“New households are triggering residential development, with completions rising across the board this year,” analysts wrote. “Single-family builders are set to complete 15,800 homes, up 18.7 percent annually. Multifamily deliveries are on track to rise 8.6 percent, or by 7,700 units.”
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All that means there’s more demand for self-storage, as more people move to the city and need a place to put their stuff, especially while they’re transitioning. And that increased demand means increased rent.
Climate-controlled self-storage rents are forecast to reach $1.36 per square foot this year in Charlotte, a 3.7 percent increase from the prior year. And that’s on top of a 3.4 percent increase in 2016. And non-climate-controlled rents are forecast to jump 3.5 percent this year, to 95 cents a square foot, on top of a 2.9 percent increase in 2016.
That’s the fastest pace of increase in the Southeast. So, as long as people keep moving to Charlotte and driving the city’s growth, expect rising rents and higher returns on self-storage facilities to drive more and more of these facilities.