Hollywood often portrays Detroit as a desolate wasteland, but it’s quite full of life as a self-storage market. Read why owners and investors are encouraged by the dynamics driving the industry in the Motor City.
In many movies, the once-mighty Motor City is portrayed in almost post-apocalyptic terms—a desolate, dilapidated city gutted by the long, painful decline of the U.S. auto industry. It isn’t a flattering image. In contrast, local self-storage professionals see a hard-scrabble city in the early stages of a comeback, surrounded by affluent suburbs in a state steadily diversifying its economy. From that vantage point, Greater Detroit looks much more promising.
Part of the reason for Detroit’s somewhat encouraging pricing is it has one of the lowest self-storage penetration rates in the country at 4.4 square feet of space per capita, compared to the national rate of nearly 6 square feet, according to Radius+. In all, the market has about 19.9 million square feet of self-storage.
“We’re probably one of the most underbuilt markets in the nation,” says Adam Pogoda, a principal at the Pogoda Cos., which operates 51 self-storage facilities in Michigan under the National Storage Centers brand.
Low supply has been a boon to facility owners, particularly as pandemic-era demand has increased. Moreover, the imbalance between supply and demand has started to attract the attention of more investors, who are assessing the region’s long-term prospects. In fact, Pogoda says his firm was recently outbid for a property by a real estate investment trust (REIT). “It’s getting more competitive,” he notes. “It’s not like Nashville, Tenn., or Dallas, but it’s growing.”