As metro Denver’s apartment market surged in the past decade, the business of storing people’s belongings boomed along with it — so much so that Denver has added the eighth-largest volume of self-storage space in the nation, according toe the latest RENT Cafe self-storage report.
Denver has added nearly 6.5 million square feet of self storage to its inventory over the past decade, surpassing Austin, Texas, and Washington, D.C., according to the latest RENT Cafe self-storage report. The market has grown by 4% each year since 2010, expanding by 50 percent — a similar rate that’s been seen in the local apartment market.
“Denver has a couple of things going for it — one is land,” said Doug Ressler, manager of business intelligence for Yardi Matrix, which operates the apartment and self-storage search website RENT Cafe. “Land is a finite commodity. If you look at building in new York, it’s limited, but in Denver you don’t have that situation south or southwest of downtown.”
Denver is also among the top U.S. markets for apartment construction. The city ranked 10th nationally with more than 72,000 units added in the last decade. The relatively small size of the apartments being added to Denver’s housing stock is fueling the demand for self-storage.
“The average square footage for an apartment is about 830 square feet,” Ressler said. “People want bigger apartments right now, but it takes 36 months to build an apartment project with permitting and zoning. We don’t necessarily see the square footage and unit configuration changing too much.”
Over the last two years, 22 self-storage facilities totaling 1.6 million square feet have been added to Denver’s inventory. There currently are 15 more storage units planned and nine are under construction, according to Yardi Matrix.
Many apartment developers are choosing to provide storage lockers onsite or locate their projects near self-storage facilities because their tenants view them as amenities, Ressler said.
The most recent addition to Focus Property Group’s metro Denver Greenbox Storage portfolio was three years ago when the company built a 113,000-square-foot storage facility in Centennial, said Josh Fine, the company’s president. But the company has been looking for appropriate locations to develop more of its environmentally friendly storage facilities. Focus Property Group has developed four self-storage facilities throughout metro Denver totaling 311,000 square feet.
“Storage follows multifamily development,” Fine said. “There’s been so much additional multifamily that there are additional opportunities. We’ll cultivate partnerships with apartment developments because it’s helpful for the apartment leasing office to tell their tenants if they need more closet space, there’s a storage place down the street.”
Walter Brauer, vice president of CBRE who specializes in the self-storage industry, said that population growth is a big driver of the demand for storage facilities. Metro Denver’s population is 2.86 million people, a 1.24 percent increase from the 2.82 million living in the region in 2019, according to Macrotrends LLC.
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While multifamily properties haves some influence over the development of self storage, the industry is reliant on residential properties in general.
“Historically, storage is used by about 11 percent of the population, and that’s been consistent for a lot time,” Brauer said. “If you had 1,000 apartments go in where you have a storage property, hopefully 100 of them will become your tenants. We have to always remember that self storage is reliant on discretionary income. You might have people without much discretionary income after they’ve paid for rent, utilities and food.”