How much self storage supply is coming to Denver?
HENDERSONVILLE, Tennessee—Explosive growth and demand for self storage space in Denver has prompted several real-estate companies to acquire or invest in the market.
STR, a leading provider of data and information services, continues to build its database of self storage development nationwide and examined the industry landscape in Denver as new supply enters the market.
Currently, STR is tracking a total of 75 self storage projects in various phases of development in Denver. This total includes unconfirmed projects that have not yet been zoned or approved as well as projects under construction or expansion. Of these projects, 68 are new construction.
STR expects 20 of these new construction projects to be completed in the next year, which would represent 7% growth in Denver self storage supply. STR also anticipates seven expansion projects to be completed, but it remains unclear whether or not the remaining 48 projects, which are in the planning and unconfirmed development phases, will be completed.
The average size of a facility under development in Denver is approximately 76,000 net rentable square feet (NRSF). The largest project in Denver tracked by STR is a facility with a total square footage of approximately 127,000. Should all 68 new construction projects in Denver be completed, market supply would grow by 23%.
It remains to be seen whether the aforementioned supply growth can be supported without an impact on performance, particularly in certain submarkets. STR does not expect all of these facilities to be completed, given that many are in their early stages, but current market occupancy levels could slip if a high percentage of these projects come to fruition.
“Developers must be very surgical in how they approach new projects right now in Denver as it’s not uncommon to have 3-plus properties either stabilizing or proposed in a proposed new site trade area,” said Brent Wright, president of Pamlico Investments. “Rental rates have softened already as the REITs did not get as large of a pricing push in spring leasing season. It’s difficult to say whether this is supply-related as we’ve yet to see a lot of projects come out of the ground. But with softer pricing leading into a potential rush of new supply in 2017 through 2018, Denver could have some ‘rocky’ roads ahead.”
If you have an interest in purchasing a listing of these facilities under development or existing facilities in markets across the United States, please contact STR at firstname.lastname@example.org.
About the Authors
Anne Hawkins leads new business initiatives in the Sector Analysis division of STR. She is responsible for managing and implementing all aspects of sales and operations across this division. Previously, Anne worked in private equity and investment banking. Anne can be reached at email@example.com or +1 (615) 824 8664 x.3341.
Note: In another article by insideselfstorage.com, Jon Suddarth, a development manager for William Warren Group, said “there were over 70 projects in metro Denver planned, rumored on under construction. Of course not all of those will be built, but 70 projects in a market that can take only about 10 or 15 in a year was a concern”. In addition, SquirrelBox, a new valet self storage startup in Denver, which makes it cheaper (customer only pays for the box space they use) and convenient (deliver, pick-up, store and return boxes to customers upon request), will serve as an alternative and might affect recent performance of self storage facilities in Denver.