Aaron Jodka
The self-storage market has undergone substantial changes in the past few years. As with other asset classes, rising borrowing costs have weighed on investment sales activity and pressured pricing. Green Street estimates asset values have pulled back around 20% since 2021, while cap rates held flat in 2024. Fundamentals have been impacted by a wave of development, particularly in Sunbelt and high-growth markets. Meanwhile, a slowdown in home purchases and normalization of migration trends have further stifled self-storage demand. However, signs suggest that the market may be poised for a rebound.
Home sales trends closely correlate with self-storage demand, as markets with active housing activity typically experience stronger rent growth for storage assets over the long term. In 2024, U.S. existing home sales dropped to their lowest level in nearly 30 years. Markets with heavy supply, such as Orlando, Dallas, Philadelphia, and Atlanta, are facing sharper rent declines, dropping by as much as 15%. Nationally, per Green Street data, rents fell approximately 10% last year. In contrast, density has bolstered market performance. Coastal markets held nine of the top 10 spots at year-end, including Portland, San Francisco, Seattle, Washington, D.C., and Orange County, where move-in rents remain stable.
As we look forward, markets with strong population growth and life event-driven moves—such as Dallas, Houston, San Antonio, Phoenix, and Atlanta—are expected to drive future storage demand, supported by affordable and available housing. Gateway markets like Manhattan, Los Angeles, and Washington, D.C., continue to support storage demand despite lower housing availability, driven by density and space constraints.
Green Street forecasts a rebound in move-in rent growth this year, with overall NOI turning positive—a trend already drawing investor interest. Institutional demand in self-storage remains strong, as evidenced by CubeSmart’s recent joint venture with Hines to recapitalize a 14-property storage portfolio in Dallas-Fort Worth. CubeSmart’s $160M acquisition of an 85% stake reflects confidence in key markets and high-quality assets within the sector. In markets such as Manhattan, select office assets are being converted to self-storage facilities, further signaling the sector’s adaptability.
With brighter days ahead, the self-storage market appears to be a compelling investment opportunity.
Sandy McDonald
Ronna Larsen