Dallas-Fort Worth is among the top metropolitan areas in the nation for self-storage development, according to new data from RentCafé.

Adding to the existing stock of 71.7M SF is another 5.4M SF scheduled to come online in 2022, making DFW the third-most-active self-storage market in the nation behind New York and Los Angeles, per the report. Demand for self-storage in the Metroplex is driven by the area’s high levels of in-migration paired with strong activity in the multifamily sector, said Mike Mele, executive vice chair of Cushman & Wakefield’s Self Storage Advisory Group.

“Multifamily development is a natural pipeline for self-storage,” Mele said. “They’re building these apartments smaller and smaller … so if [residents] want to have extra stuff, they’re going to need to rent storage.”

Nearly 70% of self-storage development occurring in the Metroplex is located in urban areas where there is an abundance of multifamily activity. With housing prices making the prospect of homeownership less attainable for many families, renters are staying in apartments longer, prompting increased demand for storage.

“Apartment dwellers are staying longer than they used to,” Mele said. “But they also move around more than homeowners — that transition creates a need for more storage.”

Prior to the pandemic, DFW was considered an undersupplied market, but that all changed with the transition to remote work. Many people cleared out spaces in their homes to make room for an office, which boosted the market. Today, the question of whether the DFW market is oversupplied or undersupplied depends on location, Mele said. According to RentCafé, DFW’s per-capita inventory is 8 SF per person, which is right on par with the national average.

“When we look at whether a market is undersupplied, we do a 3-mile ring, and then we come up with the amount of storage per person,” he said. “So, you might be in one spot, and it could be 5 to 6 SF per person and that would be an undersupply, but [from another spot], it might be 15 SF per person, which is an oversupply.”

High levels of demand have pushed rental rates to about $104 for a 10-foot by 10-foot space, up 7% year-over-year. But DFW is still priced competitively when looking at the U.S. overall — in fact, with the exception of Houston, DFW has the cheapest street rate for self-storage of all major metros, according to RentCafé.

Mele said high levels of new development may actually cause rental rates to go down.

“There’s so much there, and they’re all coming online at the same time,” he said. “Sometimes the only way to get people in is to have the lowest price.”

The Metroplex is expected to see an 8% increase in overall supply once development projects in the pipeline come online, according to RentCafé. But Mele said activity may slow in the coming months as it becomes harder to find sites that aren’t overbuilt. Increases in the cost of construction, rising interest rates and NIMBYism that hinders the industry as a whole are all factors that could dampen momentum, he added.

“You put all those together, and it makes it really hard to keep at this pace,” he said. “The low-hanging fruit has been picked, and finding a site that makes sense gets harder and harder.”