Marcus & Millichap

Raleigh Self-Storage Investment Forecast

Raleigh Metro Area, 2018 Outlook

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Builders Ignore Rapidly Rising Vacancy

Economic Overview
An influx of tech-related positions bolstered the number of professional service employees in 2017, with the sector accounting for nearly half of the 19,400 jobs added in Raleigh. All 11 employment sectors notched positive gains in 2017, a testament to the metro’s economic strength and diversity. Overall employment growth will improve this year amid a shortage of labor.

Demographic Overview
Raleigh’s millennial population expands by 3.5 percent in 2018, the largest annual gain of any major metro. The growing number of higher-paying positions is one factor that influences waves of younger professionals with degrees to relocate to the area. Developers responded by delivering nearly 10,000 apartments over a two-year span. Nearby retailers and shopping centers should benefit as these rooms fill up, supporting a nation-leading 8.6 percent boost in consumer spending.

Construction Overview
Improving job growth and a swelling millennial population motivate developers to bolster the metro’s storage inventory by 1.4 million square feet this year, following the completion of 970,000 square feet in 2017. New facilities are primarily located in Raleigh and Durham.

Vacancy/Rent Overview
Over the past two years, the metro’s vacancy rate ballooned by a combined 450 basis points. This trend continues in 2018 as availability increases another 250 basis points amid a spike in development activity. Rapidly rising vacancy hinders the possibility of rent growth with the metro’s average rate falling nearly 3 percent this year.

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