As of October 2023 CREDiQ reported that Minneapolis was the top market with a Distressed Rate (Includes any delinquent and/or specifically serviced loan), so the Radius+ team took a look to see how the Self Storage industry was fairing in the Minneapolis-St. Paul-Bloomington, MN-WI.
In 2019 the Minneapolis-St. Paul-Bloomington market saw a 11.1% increase in supply, this high growth trend continued into 2020 where there was a 7.2% increase in supply. However, things seemed to slow down in 2021 where we saw a 3.1% increase, followed by a 3% increase in 2022, which grinding to a halt in 2023, where we have observed a 1% increase in supply so far.
Such a dramatic increase in supply followed by a steep fall off indicates that demand has not kept up with supply in this market. There was a 16.8% decrease in YoY average price per square foot when we compare YTD for 2022 to 2023 in the Minneapolis market. However, what is most telling, is that there was a 22.7% decrease in YoY average price per square foot when we compare YTD for 2019 to 2023. The demand in the market does not seem to merit the influx in supply growth we saw in 2020, as rates have declined, even when we compare pre-pandemic numbers to the current average price per square foot. This mismatch could be a contributing factor as to why Minneapolis has such a high distressed rate as per the CREDiQ report.
