New Mexico isn’t the most robust of the Sun Belt states when it comes to self-storage, but the outlook is bright enough that homeowners and investors are still considering their future prospects in Albuquerque and beyond. other parts of the state. This is particularly noticeable given that population growth has stagnated relative to that of other states in the region.
For example, Texas’ population grew 8.9% from 2010 to 2020, while Arizona grew 11.9% and Colorado jumped 14.8% during the same period. In contrast, New Mexico’s population grew only 2.8%, while its largest city, Albuquerque (915,000), grew only 1.67%, according to census figures. American. Many believe that the slow growth is attributable to economic problems that have kept the state’s unemployment rate high in recent years. The unemployment rate was 8.3% in April, which was above the national average of 6.1%.
In many ways, New Mexico, especially Albuquerque and its immediate surroundings, defies the logic of self-storage. Despite the low population growth, many industry players are encouraged as the region is seen as relatively stable, with stable markets whose long-term attractiveness is expected to remain strong as long as Americans continue to flock to the states of the United States. Sun Belt in general.
“We are not a high growth market like other neighboring states; but we continue to grow and there are great opportunities here, ”says Brian Patterson, vice president of development for Titan Development, an Albuquerque-based commercial real estate developer who has built four self-storage facilities in New Mexico in recent years. . “You can find micro-markets here that are underserved. New Mexico has been good for us.
Overall, there are 187 self-storage facilities in Greater Albuquerque, representing approximately 9.4 million square feet. In terms of new builds, the metropolitan area has experienced solid, but not hyperactive, growth, with total supply increasing 9% since 2017, according to Radius +, a company specializing in self-storage data, analytics and technology. location intelligence. Meanwhile, the self-storage penetration rate (the amount of square feet per capita) remains high at 8.1, well above the national rate of around 6.
And yet Albuquerque rental rates have remained relatively high over the years. In May, prices hovered around $ 175 per month for a 10×10 air-conditioned unit, according to Radius +, while occupancy rates remained above 90%. Santa Fe, the scenic state capital, is seeing even higher rental rates, in the order of $ 225, despite fairly active new construction in recent years. Occupancy rates are also high.
“This shows how self-storage really is a market-by-market phenomenon when it comes to performance,” said Cory Sylvester, director at Radius +. “Overall, Albuquerque is not a dynamic market, but it is stable. He hasn’t seen crazy amounts of new offerings. Overall, it’s a pretty cheap one.
In this regard, the dynamic that drives Albuquerque and the State of New Mexico in general is similar to that of other self-storage markets across the country that are being supported by the pandemic and more and more people working at residence. If you do your research thoroughly and carefully, there are pockets of opportunity, so look carefully to identify underserved areas.
Although Albuquerque is seen as a secondary market, big players in the industry have taken hold, including real estate investment trusts. According to industry watchers, what is likely preventing it from becoming a “hotter” region in terms of population growth and self-storage is the lack of dynamic employers who offer services. attractive jobs to young workers. Most agree that the state needs more employers and important jobs to grow faster.
Dean Alexis, a member of the New Mexico Self-Storage Association and owner of two self-storage facilities in Santa Fe, said the state has been “mired in semi-economic malaise” for some time. “We’re definitely better than California, but not as good as Texas,” he says.
Still, the state has the respected University of New Mexico as well as the federal government’s Sandia National Laboratories, Los Alamos National Laboratory, and Air Force Research Laboratory, all based in Albuquerque. Additionally, Netflix recently announced plans to strengthen its presence by expanding its ABQ studios in the Mesa Del Sol area of Albuquerque, which includes a commitment for an additional $ 1 billion in production spending.
Despite the economic challenges, Ryan Goodman, partner of Around the Corner Self Storage, which operates eight locations across the state, is among those who remain optimistic about the future of self-storage in New Mexico. “It’s a good market that I think will grow,” he says. “I am optimistic.”
Dylan Stallings is an advisor for The storage acquisition group, which specializes in acquiring off-market self-storage facilities and portfolios nationwide. He uses his background in finance and economics to study markets and provide industry reports for potential acquisitions nationwide. The company also offers market analysis reports, underwriting and closing support. For more information call 757.867.877.