Manhattan is awash with the human condition at mid-day - it’s time for lunch for some, who approach the task like a battalion going to war. Time is money here. The City is driving, delivering, buying and selling - and on a side street in Midtown sits a highly recognizable REIT-operated self storage facility - my focus and destination.
New York has a unique relationship with the self storage industry. Searching Google for “Self Storage New York” returns with hundreds of listings - each trying to capture market interest with catchy lines like “from $5,” “first month free,” and even “free truck and driver.” You’d think you were adrift amongst the most densely populated self storage market in the world, and you’d be right.
Back in 2015, the industrial areas of New York City were building momentum, sprouting self storage facilities - which were typically booked, filled and waitlisted immediately. Despite the clamor for storage space, the City was focused on the revitalization of the more industrial areas, in an effort to create more distribution, transportation, wholesale, logistics, construction and manufacturing jobs, and curtail the installation of self storage facilities on “Designated Truck Routes” which feed the City’s industrial areas.
In just 10 minutes on the street, I noticed renters arriving in Ubers and cabs - carrying what they could fit in the trunk of a sedan. Drivers anxiously wait as passengers run into the facility and grab a rolling cart, blocking traffic, and carefully load and unload their possessions. This is not an industrial area, but it’s easy to see how this process could be more difficult in the industrial areas of the City.
In the original 2015 proposed 10-point Industrial Action Plan, Industrial Business Zones (IBZ) were the City’s great hope for revitalization of industrial businesses - building in incentives to lure manufacturers back to the City.
The Department of City Planning amended the Action Plan, calling for a Special Permit for self storage facilities within designated areas in “M districts.” The City Planning Commission and a public review process (ULURP) will now review all new self storage facility proposals - and at their discretion would issue permits to self storage facilities in designated areas of the “M districts,” with provisions for regulating floor area, off-street parking and loading and the reservation of ground-floor space for industrial use.
In his recent article, Self Storage Market Insights: NYC, James McLean, head of Business Development for Radius+ notes;
In 2023, a local law was proposed by the New York City Council, with the purpose of “Limiting increases of occupancy fees for self-storage units and restricting the reasons for termination of an occupancy agreement.”
Self Storage Units in NYC may be expensive, inconvenient, impersonal, garishly colored and packed to the brim - but are also obviously in an unlikely self storage mecca filled with the lovingly saved scraps and memories - one that has come under threat. The latest proposal states that “units occupied continuously by the same occupant could not increase by more than 2 percent per year.” In addition, termination of occupancies would be limited to non-payment of rent and fees.
While our facility in Midtown won’t be the first to face hardship from the Department of City Planning or New York City Council, it’s difficult to imagine how renters would navigate a ground-floor industrial operation quickly and safely. How would they move their things in and out? What industrial chemicals are being used and how much dust, dirt and moisture would seep into the facility and into your things? What about the cost of the infrastructure needed (elevators, parking, retail, lighting, water, etc.) to make these facilities accessible and safe for renters and their possessions?
Our fearless renter arrived and we used an elevator to reach floor 5 of 12 - sharing the elevator with a number of other renters, each uttering a slightly irritated “chuff,” common with New Yorkers who are accustomed to sharing their personal space but not pleased about it.
With dread I realized that our unit was actually a locker, mounted above a larger ground floor unit, with a small hatch-type door. I’m told I’m not the first visitor to be frustrated and confused by the height and inaccessibility of the unit. We worked together to position a stair-step ladder, and I climbed and crawled into the unit - at 5 feet tall, I’m a perfect size to sit cross-legged in the small storage locker, twisting, bobbing and trying to stay organized in the tiny space - my fellow renter was not interested in entering the locker - and I can’t blame her. How do averaged sized people navigate this hurdle? I’m told we are on a waitlist for a more accessible, ground-floor unit.
New York isn’t the only place dealing with the issue of accessible and affordable self storage space. Florida cities Orlando, Tampa and Miami saw massive growth in 2021, followed by the Bay Area, Los Angeles and Phoenix. New laws and regulations are being put in place all over the country - looking to New York is a smart move for current and future self storage owners, operators and investors.
In major urban areas of the USA, special permits, zoning, designated retail or industrial space, year-long review and permitting processes and public review are already trickling down the East and West Coasts - prompting a flurry of buy-outs, build-outs and construction before the murky waters of regional and local governments wash over. We can also see the end of consistent and self-regulated rate increases - creating the organizational issue of raising rates for specific renters and units individually, rather than collectively. Finally, we can also safely predict further regulations governing rental agreement cancellation policies or sales of units in delinquency.
The NYC Self Storage market is on the move, with most developers choosing to build new facilities over repurposing old structures - a trend already taking hold in Dallas, Philadelphia and Los Angeles. With such an overwhelming number of storage facilities being new builds, we can certainly expect the same restrictions being churned out in NYC, in other states and cities before too long.
If the last 40 years have anything to teach us, the self-storage industry is, and continues to be, the fastest growing U.S. commercial real estate sector - and this comes at a price. If your plans include investment in self storage, now is the time to start your research - and get grandfathered in when regulations shift, as they are in NYC.
For the most up to date data on the self storage industry in any area of the United States, check out Radius+, the self storage industry's most comprehensive location intelligence platform for information on everything from self storage supply and demand, to self storage developments, area demographics, and competitor pricing.
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