LOS ANGELES—The vacancy rate for self-storage facilities in the Los Angeles area has fallen to 11%, according to a recent report from Marcus & Millichap. Vacancy rates have fallen 120 basis points since last year, more than double the drop from the previous year when vacancy rates fell 50 basis points. The low vacancy in the Los Angeles area is trending 160 basis points below the national average.
The report pointed to employment gains and population growth as the culprits of this downward pressure. Job growth is expected to grow this year with the addition of 81,000 new jobs in the Los Angeles area, a growth of 2%. The local population growth will also continue to grow at about .7%, which it has done since 2008. In total, the area has gained 320,000 new residents during that time. This rate, however, is expected to accelerate to .9% over the next five-year period, meaning we will add an additional 456,000 new residents to the Los Angeles area over the next five years.
Due to the decrease in vacancy rates of self-storage facilities, rents have begun to rise. For non-climate-controlled facilities, rents are expected to rise 1.7% to $159 per unit, and for climate-controlled facilities, rents will increase by about 2.2% to $203 per unit. This is nearly a full percentage point in crease from 2013, when rents for climate-controlled units increased by 1.2% and rents for non-climate-controlled units increased the .7% from the previous year. A Marcus & Millichap expert was unavailable to weigh-in prior to the publication of this article. We will update this story as more information become available.
The pick up in the self-storage market has recently led some companies to add self-storage experts. JLL, for example, recently hired Brian Somoza as a managing director to focus on the sale and acquisition of self-storage properties. During a Q&A about his new position and the self-storage market, he told GlobeSt.com, “Self storage is advantageous for most “smart” money.”