INVESTMENT FORECAST

SELF-STORAGE 2020
Philadelphia Metro Area

New Households Make Use of Self-Storage Employment Trends

Absolute Change Y-O-Y % Change
Economic Overview

Total Nonfarm Jobs (thousands)

60 4%
Philadelphia employers added 33,000 positions in 2019 with education and health services con-

Year-over-Year Change
tributing the most roles followed by the trade, transportation and utilities sector. Job creation has 45 3%
caused the unemployment rate to decline over the past five years, from 6 percent in 2014 to around
4 percent in 2019. 30 2%

Demographic Overview 15 1%

New employment opportunities led to the influx of 10,050 residents in 2019. Job growth, in-mi- 0 0%
gration and a lower cost of living compared with other major Northeast metros supported 22,500 10 11 12 13 14 15 16 17 18 19* 20**

household formations in Philadelphia last year, the most since 2002. The added households helped
increase retail sales by about 4.6 percent, the highest annual growth rate since 2010. The continued
Demographic Trends
rise in consumer spending in 2020 will have a positive impact on self-storage demand.
Population Med. HH Income

Construction Overview 6%

Philadelphia’s self-storage inventory grew by 645,800 square feet in 2019. About 549,100 square feet

Year-over-Year Change
4%
of that space opened in suburban areas. The development pipeline will heighten by 66 percent in
2020, with the bulk of total arrivals, 831,900 square feet, set to deliver outside of the urban core. 2%

Vacancy/Rent Overview 0%

In 2019, vacancy increased by 50 basis points and it will rise again to 7.6 percent this year. Demand
-2%
remains strong nevertheless as availability in the metro lies approximately 240 basis points below 10 11 12 13 14 15 16 17 18 19* 20**
the national rate. The average asking rent will also climb, up from $1.23 per square foot in 2019 to
an expected $1.24 in 2020.
Supply and Demand Trends
Completions Vacancy

2020 Market Forecast

1,600 9%
Square Feet (thousands)

1,200 8%

Vacancy Rate
Employment Philadelphia employment growth will slow in 2020, dropping from 1.1 percent
up 0.7% in 2019. Approximately 20,000 jobs will be added to the market. 800 7%

400 6%
Population The metro’s populace will expand by 18,000 people in 2020, the same rate of
up 0.3% growth as the previous year. 0 5%
16 17 18 19* 20**

Construction Deliveries will climb by 325,000 square feet in 2020 from the 646,000 square * Estimate; ** Forecast
Sources: BLS; U.S. Census Bureau; Yardi Matrix; Union Realtime, LLC
971,000 sq. ft. feet completed in 2019. Annual openings will be among the highest of the past
Rent Trends
few years.
Metro United States
$1.60
Average Rent per Square Foot

Vacancy Vacancy is set to reach 7.6 percent in 2020, marking a five-year-high rate for the Philadelphia Office:

up 60 bps metro. Sean Beuche

$1.20 Regional Manager
2005 Market Street, Suite 1510
Philadelphia,
$0.80
PA 19103
Rent The average asking rent has been increasing over the past three years. In 2020 (215) 531-7000 | sean.beuche@marcusmillichap.com
up 1.0% the rate will climb to $1.24 per square foot.
$0.40

$0
16 17 18 19* 20**
Metro-level employment, vacancy and effective rents are year-end figures and are based on the most up-to-date information available as of January 2020. Average prices and cap rates are a function of the age, class and geographic area of the properties trading
and therefore may not be representative of the market as a whole. Sales data includes transactions valued at $1,000,000 and greater unless otherwise noted. Forecasts for employment and self-storage data are made during the fourth quarter and represent
estimates of future performance. No representation, warranty or guarantee, express or implied may be made as to the accuracy or reliability of the information contained herein. This is not intended to be a forecast of future events and this is not a guaranty
regarding a future event. This is not intended to provide specific investment advice and should not be considered as investment advice.

© Marcus & Millichap 2020 | www.marcusmillichap.com