The state known as the Heart of Dixie saw an accumulated $50.06M of self storage sales transactions in 2020, a 60.4% increase since the $31.22M that was sold in 2019, giving it the fifth position in our list. The six facilities that were sold last year in fact represent a reduction from the eleven that changed hands the year before, but this reduction of -5 was still less than the average drop across all the states, which was -8.
A total of 485,582 square feet of storage space was sold in 2020, a drop from 749,127 the previous year. However, this represents 2.2% of the total inventory, which is more than was shifted in California and New York last year, for example. The six properties sold were spread out across the state, in Mobile, Huntsville, Madison, Irondale and Sterrett. 2020’s transactions were clearly quality real estate as the average price per square foot rose 147.4% year-over-year, from $41.7 to $103.1.
4. New Jersey
The $73.13M of self storage space sold in New Jersey in 2010 was 69.8% greater than the amount transacted the previous year, $43.07M. This also represents a slight 7.1% rise in the cost per square foot, from $105.9 to $113.4. Comparable to the total growth in sales volume, there was a corresponding 69.8% increase in the number of facilities sold in 2020, eleven as opposed to seven the previous year.
Unsurprisingly, the total number of square feet that was traded also jumped considerably between 2019 and 2020, from 406,743 to 645,015, representing an increase from 1% to 1.5% of the total inventory. The spread of these facilities was well distributed around the Garden State, with Ocean, Norwood, Ledgewood, West Caldwell, Haledon, Clifton, Sparta, Hardyston, Sicklerville and Lindenwold all seeing some of the action. The most expensive sale across all our top-five states was for $19.25M in West Caldwell, just northwest of Newark.
Out of our top five, the Great Lake State scored the highest sales volume in 2020, a total of $117.20M, which was a 75.9% increase from the $66.62M that was transacted the year before. This is in stark contrast, however, to the number of facilities sold, which dropped by 25 from 46 to 21 during this time. This is reflected in the square footage sold, which went from 2,591,164 to 1,344,503, a decrease of -48%, dropping from 6.8% to 3.4% of the total inventory.
The surprising fact that many more dollars were accrued in 2020 while fewer facilities were sold is due to the changes in the cost per square foot. This more than tripled, going from $25.7 in 2019 to $87.2 in 2020. The costliest facilities were in Westland, Novi, Chesterfield and Lake Orion, in the Detroit area, and in Okemos, which is located in the central-southerly part of the state. Others changed hands in Ann Arbor and Livonia, also near Motor City, and in Grand Rapids and Wyoming more to the west.
The self storage sector in the Beaver State witnessed a five-fold increase in sales from 2019 to 2020, from $8.93M to $45.30M, and this puts it in second place on our list. The number of facilities that changed hands during that time doubled, from three to six, and this increase of three puts it in the top five of all states in this regard. The cost per square foot also saw a rise, of 36.6%, from $74.9 to $102.3.
In terms of the square footage that was traded, 2020’s total of 442,790 was a 271% improvement on the 119,151 that changed hands in the previous year, representing a jump from 0.5% to 1.8% of the total inventory. Interestingly, five of the six facilities traded are in Salem, the state’s capital but a much smaller town than nearby Portland. The state’s sixth sale was also its largest of 2020, at $15M, and is located in the Portland suburb of Milwaukie.
Taking first place in our list of states whose sales of self storage facilities rose dramatically from 2019 to 2020 is Connecticut, going from $2.11M to $16.71. While the actual volume of sales might not seem great, it should be noted that the number of facilities sold also jumped dramatically during this time, from two to 15, and this increase is not only by far the biggest in our top five but also nationwide.
The price of storage sold per square foot went down by -15.1% from $31.9 to $27.1, making Connecticut the only state in out top five to see a reduction, but as the 2019 base of just two facilities is small this may not be significant. The increase in square footage sold, from 66,200 to 617,448, represents a jump from 0.4% to 3.6% of the total inventory, by far the highest of the five states we consider here. The fact that many facilities changed hands for a lesser total than the averages seen in other states is explained by their small size, the largest sales being only $5.19M and $4.45M, in Meriden and Derby, respectively.
Large US cities rack up self storage facility sales but those in niche locations also prosper
When looking at the US cities which saw the largest volumes of self storage sales in 2020, a different but complimentary picture emerges.
Heading our top 20 is New York City, specifically the boroughs of Brooklyn and the Bronx, which clocked up a total of $84.4M sales in 2020. That represented a small drop of -$3.7M since the year before. The most expensive self storage transaction in The Big Apple cost $48.79M, at $350.31 per square foot, in Brooklyn’s Sunset Park neighborhood.
San Diego comes second on the list. 2020’s sales total there was $67.4M, a $48.2M increase over the previous year, with the largest transactions costing $34.0M, centrally located near the Old Town, and $27.41M, in the Mount Carmel Ranch neighborhood. The pricing of these worked out at $285.28 and $334.29 per square foot, respectively.
Taking third place, Las Vegas saw self storage sales totaling $49.48 in 2020, a 55.4% increase on the previous year’s $31.83M. The City of Lights’ most expensive transaction of 2020 cost $16.80M, that’s $300.75 per square foot, in the Peccole Ranch neighborhood. Boston, in fourth place, witnessed one of the biggest transactions of 2020, the $48.25M sale of a facility in the central Seaport District, working out at $458.34 per square foot.
Napa, CA, is the surprise entry in the top five. This small town of less than 80,000 inhabitants famous for its vineyards had a well-known family-run storage business which was sold at the beginning of last year for no less $40.5M, representing a sizeable $360.75 per square foot. As might be expected, it offers wine lockers, no fewer than 320 of them, and has seen some famous clients in this rather exclusive corner of California. The former owner has promised that he and his wife will write a book about the business, he has so many stories!
Clearly there was healthy sales activity in many of the nation’s self storage markets in 2020, despite the restrictions that impacted everbody involved in the business. Storage real estate in the larger cities commanded high prices, but it appears that other regions have been leading the way in terms of increased sales activity year-over-year. Plus, there were sales in smaller, more exclusive locations that went for large sums. Self storage investors know that new locations and markets can always be found, and many operators are reporting plenty of customers and the success of new procedures despite the challenges. Nobody is going to pretend that 2020 was a great year, but there was activity and optimism in some places, and with prices per square foot holding up overall, the stage appears to be well set for the self storage industry in 2021.