TUESDAY, MAY 17, 2022
Self-storage facilities are growing fast in Phoenix – but not quite as fast as the city itself. Between 2010 and 2020, Phoenix was the fastest-growing big city in the United States. It added more than 150,000 residents over the decade, increasing its population by 11.2 percent to 1.6 million people. Although it’s traditionally been a haven for retired people and immigrants, the nation’s fifth-largest city added more people over the decade because of an expanding tech workforce and affordable housing, especially compared to neighboring California.
The booming economy has led to strong income gains. The Phoenix-Mesa-Glendale metro area’s median household income of $67,068 (slightly more than the national median of $64,944), has risen from an inflation-adjusted $64,924 over the past decade. Four of the 10 places with the highest incomes in the state, including top-ranked Paradise Valley ($212,773) are located within the Phoenix metro region.
Data from the 2016-20 American Community Survey show much of the increase in median household incomes has come from people moving to Arizona. According to the ACS, about 5 percent metro residents moved from a different state or metro area in the most recent year, more than double the 2.3 percent of Americans who changed states in 2020. More than 15 percent of metro area residents who moved from another state over the last year reported incomes topping $75,000.
When it comes to self-storage facilities, large parts of the Phoenix metro area appear saturated, especially to the northwest and southeast of downtown Phoenix. Overall, however, Maricopa County, which includes the greater metro area, has 5.7 square feet of self-storage space per resident, well below the U.S. average of 8 square feet.
Phoenix wouldn’t appear to have many geographic advantages, given its climate and concerns over its water supply from the ever-dwindling Colorado River. But the metro has one major advantage: Space. Because it’s in the desert, there’s very little in the way of natural barriers to contain its explosive growth. Four of the five fastest-growing cities in the state over the last decade are located in the Phoenix metro area.
It shouldn’t be surprising that a metro area as sprawling as Phoenix doesn’t have any one area where self-storage opportunities about. Like the metro area itself, the opportunities are scattered. Several zip codes within a five-, 10-, and 20-mile radius of downtown Phoenix offer excellent opportunities, even in large suburbs like Gilbert, Avondale, and Sun City.
Of course, you can’t have growth like Phoenix without major residential construction. Since 2018, at least 375 residential projects adding 87,300 housing units worth an estimated $23.9 billion have been finished, developed, or planned within a 20-mile radius of downtown Phoenix. About 13,600, roughly half, are located within 10 and 20 miles of the city center.
In this newsletter, we’ll examine the potential for self-storage in three Phoenix-area zip codes, located within a five-, 10-, and 20-mile radius of 200 West Washington Street (City Hall). The zip codes were selected on the basis of a proprietary TractIQ opportunity score, based on factors that include population projections, housing construction activity, and available self-storage square footage per resident.
Estrella/South Phoenix, Zip Code 85009
The 85009 zip code includes the Estrella and South Phoenix neighborhoods just west of central Phoenix and straddling Interstate 10. Although it’s far from a wealthy neighborhood, the zip code has a number of potential advantages when it comes to self-storage facilities.
The median household income of the zip code is $38,228 is far less than the median for the city, metro, state and nation.
Likewise, the percentage of housing units in the zip that are occupied by owners – 45.4 percent – is lower than the city, metro, state or national numbers. The median home value of $132,000 is less than half the metro figure of $269,300 and far less than the national average of $229,800.
Although the zip code has a low percentage of homeowners, single-family detached homes still make up 61.7 percent of all housing units, more than the city figure and on a par with the national percentage of single-family detached homes.
More than 3,400 housing units worth an estimated $1.2 billion have been planned, developed or built within three miles of the 85009 zip code since 2018, according to building permit data reviewed by TractIQ.
There are a considerable number of self-storage units to the north of the zip code, but 85009 itself only has three self-storage facilities. It has an average of 2.69 square feet of self-storage per resident, far less than the national or county average. Within a three-mile radius, there are 10 facilities; among the four that have pricing data, the average cost per square foot is $1.62 – cheaper than the Arizona average of $1.72 and slightly more than the $1.61 national average. Large, climate-controlled self-storage units are much cheaper in the 85009 zip code, averaging $1.25 per square foot. The national average is $1.38; the Arizona average, $1.58.
Paradise Valley, Zip Code 85253
The 85253 zip code includes Paradise Valley, a suburb of 14,000 that has the highest median household income of any zip in the state. The zip code is northeast of Phoenix and adjacent to the Phoenix Mountains Preserve, a series of parks that are among the largest urban open spaces in the world. Paradise Valley has been described as the “Beverly Hills of the Southwest” for its multimillion homes, luxury golf resorts, and high-end shopping.
The median household income in the 85253 zip code is $170,224, far more than the $67,799 income reported by a typical household in Maricopa County and the U.S. median of $64,994.
More than 85 percent of housing units in the zip code are owned, rather than rented, far more than the metro or national averages of 64.4 percent Almost 80 percent of homes in the zip code are single-family detached units – again, more than the statewide average of 64.1 percent or the national average of 61.7 percent.
Home values in the neighborhood are among the highest in the United States, with the median value pegged at $1.336 million — almost six times the U.S. median home value of $229,800, according to the 2016-20 American Community Survey.
Building permit records reviewed by TractIQ show more than 160 housing units worth an estimated $222 million have been built or planned in the neighborhood since 2019.
There are no self-storage facilities in the immediate neighborhood, but a handful on the fringe; as a result, there’s only an estimated 0.46 square feet of self-storage space per resident in the 85256 zip code. There are 23 facilities within a five-mile radius, and eight have provided pricing data. The cost per square foot of $2.08 within five miles is considerably more expensive than the Arizona average of $1.72 or the national average of $1.61. The gap is even wider for large units, with an average square foot cost of $2.66 within five miles of the zip code, compared to a national average of $1.57 and a state average of $2.08.
Mesa, Zip Code 85203
The 85203 zip code is part of Mesa, the state’s third-largest city after Phoenix and Tucson. It’s less than 20 miles east of Phoenix. Although the Mesa area has more than 500,000 residents, it retains its desert atmosphere, with beautiful views of the Superstition Mountains. The zip code is in north-central Mesa, bordered by the Salt River to the north and extending almost halfway through the city to the south.
The median household income in the 85203 zip code is $60,412, slightly less than national, state, or metro figures but still solidly middle-class.
Likewise, the percentage of the zip code’s owner-occupied housing units, 54.8 percent, is less than the national figure of 64.4 percent. The typical home in the 85203 zip code is valued at $270,200, slightly more expensive than the metro average of $269,300 but still much more than the national $229,800 or $242,000 state figures. Slightly more than 58 percent of housing units in the zip code are single-family, detached homes, less than the metro, state, or national averages.
At least 474 housing units worth an estimated $280 million have been planned, developed or built since 2018 within a three-mile radius of the zip code, according to building permit records reviewed by TractIQ.
There are three self-storage facilities within the 85203 zip code, giving it an average of 2.65 square feet of self-storage space per resident. There are 22 facilities within a three-mile radius; prices were provided for nine. The average square foot cost within three miles is $1.85, slightly more expensive than the national average of $1.61 and the Arizona average of $1.72.
Author: Frank Bass