Tampa's self-storage market is expected to bounce back quickly from Covid-19 setbacks
By Ashley Gurbal Kritzer
Tampa Bay Business Journal
Published: Jul 3, 2020

Before the novel coronavirus pandemic took hold in the U.S., there was concern that the self-storage property market in Tampa and throughout the country was reaching an overbuilt situation, quickly approaching a point where supply would outpace demand.

“Self-storage has a reputation as a cash cow, that it’s recession proof,” said Mike Mele, the Tampa-based vice chairman of Cushman & Wakefield Inc.’s self-storage advisory group. “So guys tend to pile in. They’re not that hard to develop.”

Self-storage properties may not be recession proof, but they’re poised to weather the economic fallout from the pandemic far better than many other sectors of commercial real estate. By number of self-storage facilities, Tampa is ranked 14th in the U.S., and Mele said that while there have been declines in occupancies and rental rates, he expects the market to quickly recover.

Construction spending on self-storage properties exploded 584 percent from January 2015 to January 2020, hitting a peak in 2018, according to Cushman data. Deliveries of new units were expected to slow before Covid-19 arrived on U.S. shores. New deliveries are expected to decrease 52 percent by 2023, according to Yardi Matrix.

“Self-storage remains relatively resilient with minimal fundamental changes to underlying drivers of demand in the long-term,” Cushman wrote in its mid-year outlook report on the sector. “The near-term shocks to NOI, including flattening or declining rental rates for the remainder of the year, will be felt.”

After the Great Recession, a spike in foreclosures drove demand for self-storage units as displaced homeowners moved to smaller rental properties. Mele expects to see an increase in that customer this time around as well, but those tenants hardly represent the majority of self-storage renters.

“That is a plus to a downturn,” he said, “but it’s still not as good as having everyone using it as an extra garage.”