State of the Industry

Change is the Only COnstant

Depending on who you ask, self storage is somewhere near the bottom, bouncing along the bottom, or sitting in what some call a “long bottom.” Transactions are harder to get done, financing is expensive, revenue growth is slow, and expenses continue to climb. From an owner’s perspective, it can feel like we have been sitting in the same place for a while.

But stagnant does not mean unchanged.

In fact, I would argue that the state of the self-storage industry today is change. The customer has changed. The investor has changed. And maybe more than anything, the way we operate has changed.

The Customer Has Changed

For years, we joked that storage had two primary customers. There was the happy customer who sold their house for more than they expected and needed somewhere to put their belongings during the transition. Then there was the not-so-happy customer who lost the house, went through a divorce, changed jobs, or was moving back in with momma and them.

Either way, much of storage demand was tied to transition.

Those customers still exist, but today we have another one. Let’s call them the “meh” customer.

Nothing dramatic necessarily happened. They are simply overwhelmed. Housing is expensive. Living spaces are smaller. They have too much stuff and not enough room. Moving into a larger home could increase their monthly housing cost substantially, while renting a storage unit gives them the extra closet, garage or basement they need at a much lower cost.

The numbers support this shift. Self Storage Association data shows household storage usage grew from 8.95% in 2005 to 12.6% in 2024. TractIQ’s Q2 2026 REIT analysis also found lower move-out activity and longer customer stays across the major operators. Public Storage reported churn declining from 19.6% to 18.2% year over year.

That matters to owners. Storage is increasingly becoming part of a customer’s ongoing lifestyle rather than simply part of a transition. Longer stays mean fewer turnovers, lower costs associated with replacing tenants, and more opportunity to manage existing-customer revenue.

The Investor Has Changed Too

Twenty years ago, particularly outside major metropolitan areas, the likely buyer of a self-storage facility was reasonably local. Self storage was still one of commercial real estate’s better-kept secrets, and investors expected strong returns for taking the risk.

Then COVID created the perfect storm. Storage demand surged, debt was historically cheap, other real estate sectors struggled, and investors discovered our industry in a big way. Values climbed to levels we had never experienced.

That market is gone, but those investors are not.

Today’s buyer may be sitting three states away. Technology, centralized operations and third-party management have removed many of the geographical limitations that once existed. Extra Space now manages nearly 2,000 facilities for third-party owners, while CubeSmart manages more than 870.

Today’s investor is also better informed. Before ever calling an owner, buyers can research rents, occupancy, competition, demographics, new supply and financial performance. Technology has made information that was once difficult to obtain increasingly accessible.

For owners considering a sale, this creates both opportunity and accountability. Your buyer pool is much larger than it once was, but your facility is also being compared with opportunities across multiple markets. Clean financials, strong collections, efficient expenses and sustainable NOI matter more than ever.

Operations May Be the Biggest Change

Your competition today is not simply the storage facility down the road. Increasingly, you are competing against their operating system.

Recent REIT results show why this matters. Extra Space reported second-quarter same-store revenue growth of 2.4%, while expenses declined 0.5%, producing 3.5% NOI growth. SmartStop reported revenue growth of 1.3%, while expenses declined 3.4%, and NOI increased 3.7%.

In a slow-growth market, those numbers are significant. If substantial rent growth is difficult to find, operational efficiency becomes one of the clearest ways to improve NOI. And because value ultimately follows NOI, relatively small operational improvements can have a much larger impact on property value.

Automation and AI are increasingly part of that equation. Online leasing, revenue management, collections, customer communication, staffing, marketing, pricing and reporting can all be handled more efficiently than they could just a few years ago.

Independent owners do not have to become REITs. But we do have to compete with them.

Fortunately, many of the same tools are now available to smaller operators through management software, call centers, automated leasing, revenue management, digital access, online payments and AI. The question is no longer whether the technology exists. The question is whether we are using it effectively.

Change What You Can Control

Through all this change, the fundamentals remain familiar. Revenue matters. Expenses matter. Collections matter. Occupancy matters. Tenant retention matters. And ultimately, NOI drives value.

So while we wait for interest rates, transaction volume and valuations to find their next direction, there is plenty owners can control.

Compare your facility today to six months ago. Are customers staying longer? Are collections improving? Are expenses growing more slowly than revenue? Is it easier for customers to rent from you? Are you using technology to eliminate repetitive work and improve service? Do you know how your rents and occupancy compare with your competition?

Most importantly, do you know what all of these changes are doing to your facility’s value?

The economy may feel flat, but our industry is anything but stagnant. The customer has changed. The investor has changed. Operations have changed. And the owners who recognize those changes and adapt will be better positioned for whatever comes next.

Change is the only constant. Make sure you are changing with it.

Whether you are refinancing in the next 24 months, considering an expansion, developing an exit strategy, or simply want to understand where you stand today, our team at Sauls Commercial Real Estate is here for the conversation. Knowing your current value gives you the information you need to make the right decision when the time comes.

 

SOURCES:

https://www.eia.gov/petroleum/gasdiesel/

https://fred.stlouisfed.org/series/APU0000708111?utm

https://fred.stlouisfed.org/series/APU0000709112?utm

https://fred.stlouisfed.org/series/GS10?utm

https://fred.stlouisfed.org/series/MPRIME?utm

https://www.freddiemac.com/pmms?utm