Is San Diego’s Self-Storage Market Getting Overbuilt?

Wayne Johnson

The self-storage niche has been thriving in markets where multifamily demand has proven unyielding in the last several years. Because San Diego, according to Scott Peterson of CBRE, considers multifamily its darling, it is no surprise that an active self-storage market has erupted. The recent sale of a 900-unit self-storage facility in Chula Vista illustrates the hot demand. Although the newly constructed property has yet to go through a leasing campaign, it received fervent bids from investors looking to plant capital in the self-storage niche market.

Strategic Storage Growth Trust, an investment trust sponsored by SmartShop Asset Management, LLC won the deal. While the deal shows the firm’s enthusiasm, it also has some concerns about new development. “We are optimistic that the self-storage market will continue to perform well in San Diego,” Wayne Johnson, chief investment officer at SmartShop Asset Management, tells GlobeSt.com. “There is quite a bit of new development activity either underway or in the entitlement phase in the market. Hopefully those new locations won’t create overbuilt pockets in some of the sub-markets. We are paying close attention to this activity.”