Coming Off the Bottom: Why Self Storage May Be the First Real Estate Sector to Rebound

Fundamentals Are Firming Up

Self storage experienced its first real cooldown in years in 2023 and early 2024. Occupancy rates declined from post-pandemic highs, and monthly street rates decreased year-over-year as supply caught up with demand. However, more recent data suggest that the correction phase is tapering off.

As of February 2025, national street rates declined just 0.8% year-over-year, the most modest decrease in over 12 months and a sign that pricing may be bottoming out¹. Importantly, some major metros, including Tampa, San Jose, and Chicago, have already flipped to positive rent growth on a month-over-month basis². While still below peak pricing, the trajectory has flattened, signaling the possibility of greater price stability heading into the second half of the year.

Occupancy trends are also encouraging. Despite seasonal softness, average occupancies are holding near 90% in stabilized portfolios for top-tier operators³. In the self storage world, that's a signal of underlying strength.

Structural Demand Drivers Are Intact

Behind the sector’s durability is a simple truth: people almost always need space. Whether driven by a job relocation, downsizing, divorce, business inventory overflow, or college move-in season, demand for storage is fundamentally tied to life transitions, not GDP.

That reality continues to hold. According to StorageCafe, one in three Americans currently uses self storage, and another 18% say they plan to in the near future⁴. The use case is no longer niche. It's mainstream.

In addition, two long-term trends remain supportive:

• Remote work is driving a reallocation of space within the home, resulting in increased short-term personal storage needs.
  
  
• E-commerce expansion, particularly among small businesses, is driving increased demand for business storage units that offer logistical flexibility without long-term commitments.

These shifts don’t appear to be temporary responses to pandemic-era disruption. They seem to represent more permanent behavioral realignments that are likely to underpin consistent user demand in the years ahead.

New Capital Is Flowing Back In

Investor confidence in the sector looks to be on the rise. REITs, private equity firms, and institutional platforms are once again making strategic moves. In one notable deal, CubeSmart acquired its partner’s 80% interest in a 14-property Dallas-Fort Worth portfolio for $452.8 million, demonstrating conviction in both the market and the asset class⁵.

Meanwhile, developers are slowing new supply pipelines. According to Yardi Matrix, as of Q1 2025, there were 56.1 million square feet of storage space under construction, down from previous highs and representing just 2.9% of total inventory⁶. For context, when self storage supply growth slows while demand remains steady, rent growth typically follows.

We’re also seeing increased bridge lending activity in the sector. Over 24% of storage-related bridge originations in Q4 2024 converted to permanent financing, suggesting operators see value in stabilizing and holding assets rather than flipping them quickly⁷. That long-term orientation bodes well for institutional participation in the future.

Implications for Advisors and Investors

For RIAs, family offices, and investors seeking real asset diversification, self storage may represent an early-cycle opportunity. Its historically low correlation to traditional asset classes, combined with predictable cash flow potential, can make it a useful counterbalance in a portfolio.

But access and execution matter. Self storage performance is highly location-sensitive. Oversupply in one submarket can lead to years of underperformance, while another just a few miles away might benefit from strong absorption and constrained supply. That’s why local expertise, site selection rigor, and operational discipline are paramount.

Final Thought: Know Your Partners

While the overall self storage market is showing encouraging signs for investor entry points, performance can vary by location and market conditions. For that reason, it’s essential to work with only the most experienced and reputable fund sponsors who bring transparency, execution depth, and proven expertise to every investment.

Self storage may not grab headlines like AI or venture capital. However, for advisors and investors building resilient portfolios, it may be one of the smartest sectors to watch this year.

Footnotes

1. Yardi Matrix, Self Storage National Report, February 2025 
2. CRE Daily Brief, “Self-Storage Faces Challenges but Shows Signs of Stabilization,” March 2025 
3. Cushman & Wakefield, Self Storage Sector Outlook, Q1 2025 
4. StorageCafe, 2025 Self Storage Industry Statistics 
5. Newmark, CubeSmart Deal Announcement, February 2025 
6. Yardi Matrix Development Pipeline Report, February 2025 
7. SkyView Advisors, Self Storage Industry Report, Q1 2025