Demand Has Turned

After 18 months of occupancy and move-in rate declines combined with tough comps from the post-COVID peak, there’s a new tone coming out of the self storage REITs this quarter—and it’s not just cautious optimism. 

Across Public Storage, Extra Space, and CubeSmart, the message was clear: demand has turned, and fundamentals are stabilizing faster than expected.

The Data Looks Better

CubeSmart saw a sequential improvement in move-in rates from -10% in Q4 to just -2% in April. Rentals were flat year-over-year in Q1, which in today’s climate is a win.

Extra Space took that further—by the end of April, their street rates were flat YoY, and occupancy ticked up to 93.7%, a full 100 basis points ahead of Q1 2024. 

Public Storage echoed the trend, reporting improved rental volumes and narrowing occupancy gaps.

We’re not back to 2021 pricing power, but this quarter marked the first time in over a year where all three operators saw month-over-month rate increases and positive demand indicators—particularly in digital traffic and customer inquiries.

As we can see below, rental rates over the last 20 years have had short periods of softness, followed by much longer periods of sustained growth.

Source: Public Storage, Extra Space Storage and CubeSmart Financial Disclosure, DXD Capital

Why It Matters

We may be entering a unique period in the storage cycle with pricing stabilizing, customer demand returning to baseline, and new supply slowing down. What’s unique here is high mortgage rates continue to constrain the transaction volume in the housing market, as home sales remain near historical lows.

The implication being that if home sales were to accelerate, that would be an additional tailwind for demand. 

Source: Federal Reserve Economic Data & DXD Capital

Source: National Association of Realtors via Mortgage News Daily, DXD Capital

We believe that Q1 2025 will go down as the quarter where the momentum in the sector turned. With developers still mostly on the sidelines, we could not be more bullish on the prospect of building new sites.