[[{“value”:”
**Self-Storage Sector Shows Signs of Recovery as Supply Glut Begins to Ease**
The self-storage industry, often closely linked with residential trends, is beginning to show signs of improvement after a period of oversupply led to diminished investor interest. According to a recent report from Trepp, demand in the sector is heavily driven by individuals relocating from one home to another. These temporary storage needs frequently become long-term leases, forming the backbone of the industry’s customer base. While other factors contribute to overall demand, household moves account for roughly half of the sector’s usage.
Earlier this year, Trepp highlighted the challenging environment facing the industry, noting that “the self-storage business had been on the outs with investors as supply got well ahead of demand.” Data from Yardi Matrix backs this up, indicating that the national inventory of storage units increased by 9.4% over the last three years.
However, momentum may be shifting. New supply added in the 12 months through May accounted for just 2.9% of existing inventory, down significantly from recent highs. Public Storage, one of the sector’s leading players, anticipates supply growth of just 2.5% in 2024. The U.S. is currently home to approximately 55,000 self-storage properties, with the Southeast region reportedly having the highest number of units per capita, according to industry expert Mark Helm.
At the Illinois SSA Great Lakes Owners Summit held in Chicago, industry professionals observed strong performance in Midwestern markets such as Chicago and Minneapolis. Yardi Matrix noted that this strength is due to steady demand coupled with a slowdown in new supply, which has helped market fundamentals recover more rapidly in the region. Nationally, however, the recovery is uneven, as economic uncertainty and a fragile housing market continue to pose challenges. High interest rates and wide bid-ask spreads have also muted transaction volumes, despite ongoing investor interest.
Encouragingly, industry sentiment is starting to improve. Yardi Matrix reported that rents are stabilizing and development activity is beginning to taper off. Although national rents were down slightly year-over-year in June by 0.1%—a milder decrease compared to May’s 0.4% and April’s 0.3%—several metropolitan areas experienced rent increases. Specifically, rents for non-climate-controlled units rose year-over-year in 13 of the top 30 metros, while climate-controlled units saw rent growth in 19 of the top 30 metros.
Despite earlier challenges, property valuations have stabilized. According to SitusAMC, as cited by Trepp, rent growth has slowed due to oversupply, but infill markets—where expansion opportunities are limited—are experiencing favorable conditions, including rent growth and improved tenant retention.
A report from Marcus & Millichap, “Self-Storage Investment Outlook for Midyear 2025,” highlights that insurance costs are becoming a growing concern for operators. On the upside, sales volume for the six months ending in March increased compared to the same period last year. Additionally, the report emphasized the availability of debt capital, with banks, life insurers, and CMBS lenders remaining active in the space.
The regional nature of self-storage remains a key theme. Markets such as Denver and Charlotte continue to deal with the effects of oversupply, proving that local dynamics heavily influence performance. The Marcus & Millichap report offers both national analysis and granular local insights to help investors navigate this nuanced environment.
As supply begins to realign with demand, and capital remains accessible, the self-storage sector appears to be on a path toward stabilization and renewed investor interest.
“}]]
