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For the past two years, I've been telling clients to be patient with self-storage. The COVID boom created a supply surge that flooded markets from Phoenix to Atlanta, turning rent growth negative and forcing operators into discount wars just to maintain occupancy.
But something's changing. Climate-controlled units just posted their first year-over-year rent gains since 2022. Street rates are stabilizing nationally. And in select metros, we're seeing the micro-market fundamentals that historically precede meaningful rent recovery.
Here's where the smart money is positioning—and the signals that separate tomorrow's winners from today's laggards.
The National Picture: Stabilization, Not Recovery
Let's start with the data that matters:
Street Rates: National average asking rent hit $16.90/sf in June, essentially flat (-0.1% YoY) for the combined unit mix. But dig deeper: climate-controlled units rose 0.4% year-over-year while non-climate-controlled fell 0.4%.
The Trend: 26 of the top 30 metros saw monthly increases in advertised rates in June. Year-over-year, 13 metros posted gains for non-climate-controlled units and 19 metros showed gains for climate-controlled—the first green shoots we've seen.
Supply Pipeline: Projects under construction represent 2.7% of existing stock, down from much higher levels. New starts fell 20% in 2024 versus 2023, setting up a friendlier competitive environment for 2026-2027.
Source: CBRE Investment Management showing effective rent and vacancy dynamics
The REIT Reality Check: What Operators Are Actually Seeing
The public companies give us the clearest read on market conditions:
Public Storage (The Market Leader)
Same-store revenues up 0.2% YoY in Q2
Occupancy improved to 79.2% from 78.8%
Realized rent per occupied sf up 4.4% YoY—evidence that in-place rent growth is offsetting softer street rates
But: Promotional discounts nearly doubled (+98.6% YoY), showing continued competition for new customers
CubeSmart (The Growth Story)
Same-store revenue -0.5% YoY
Occupancy at 91.1% (down from 91.8%)
Average move-in rate fell 4%, highlighting pricing pressure at the street level
National Storage Affiliates (The Sun Belt Reality)
Same-store revenues -3.0% YoY, NOI -6.1%
Average occupancy down 240 basis points to 84.2%
Heavy concessions to drive rentals in supply-heavy markets
The pattern: Operators are defending occupancy with street-level discounting while pushing existing customer rate increases. It's working in constrained markets but struggling in oversupplied Sun Belt nodes.
Metro Winners: Where Rents Are Actually Firming
Based on REIT performance data, here are the markets showing genuine rent recovery:
Coastal Gateway Leaders
San Francisco: +3.3% realized rent/sf², 94.1% occupancy Seattle-Tacoma: +3.8% realized rent/sf², 93.1% occupancy
Washington DC: +1.9% realized rent/sf², 94.0% occupancy New York: +1.7% realized rent/sf², 93.3% occupancy
Midwest Surprise
Chicago: +2.6% realized rent/sf², 93.4% occupancy Multiple operators cite "regional strength amid national uncertainty" with the Midwest showing steadier demand and less new supply pressure.
High barriers to entry: Limited infill sites, expensive land
Constrained supply: UC pipeline <2% of existing stock within 5 miles
Dense renter populations: High apartment penetration, frequent moves
Strong in-place tenant bases: Higher acceptance of existing customer rate increases
Metro Laggards: Where Supply Still Hurts
The Sun Belt markets that boomed during COVID are still working through supply hangovers:
Still Under Pressure
Dallas-Fort Worth: -5.1% realized rent/sf², 90.4% occupancy Atlanta: -8.2% realized rent/sf², 89.1% occupancy Austin: -7.3% revenues, -22.6% NOI, 88.6% occupancy Phoenix: -2.9% revenues, 88.9% occupancy
The Pattern
These markets share elevated construction pipelines (many above 4-6% of stock under construction), aggressive promotional activity, and slower lease-up of 2022-2024 deliveries.
Source: CBRE Investment Management supply, demand, and vacancy projections
The Micro-Market Drivers That Separate Winners from Laggards
After analyzing the performance data, here are the specific factors that predict rent recovery:
1. Supply Friction (The #1 Predictor)
Under construction pipeline: <2% of existing stock within 3-5 miles
Recent deliveries: <3% of local stock delivered in past 12 months
Future pipeline: Limited entitled parcels and active projects
2. Demand Characteristics
High renter share: >50% of households rent (more frequent moves)
Dense population: Limited garage/basement storage alternatives
Turnover catalysts: Universities, medical centers, military bases
Stable incomes: Support climate-controlled premiums and reduce delinquency
3. Product Mix Advantages
Climate-controlled percentage: CC units leading rent recovery (+0.4% YoY vs. -0.4% for NCC)
Premium amenities: Security features, covered loading, 24/7 access
Unit mix optimization: Right-sized units for local demand patterns
4. Operating Excellence Indicators
Rising realized rent: In-place rent growth with stable occupancy
Disciplined promotions: Narrowing promo expense as percentage of revenue
ECRI acceptance: Existing customers accepting rate increases without moving out
Collections efficiency: Low delinquency rates and fast resolution
How to Spot Tomorrow's Winners Today
The Investment Screening Process
Supply Screen (Critical):
Map all UC projects within 5-mile radius
Calculate as percentage of existing stock
Target markets with <2% UC exposure
Verify minimal lease-up activity from 2022-2024 deliveries
Demand Screen:
Renter population >50% of households
Young adult population growth
Employment tied to move-heavy industries (tech, healthcare, military)
Limited single-family detached housing (less garage space)
Operating Screen:
Realized rent per occupied sf trending up
Occupancy stable or improving (target 92%+)
Promotional discounts narrowing as percentage of revenue
Average move-in rates stabilizing or rising
The Climate-Controlled Advantage
June data showed year-over-year gains in 19 of 30 metros for climate-controlled units versus only 13 for non-climate-controlled. CC units are leading the recovery for several reasons:
Weather premiums: Extreme temperatures drive quality demand
Insurance concerns: Better protection for valuables
Higher barriers: More expensive to build, less commodity competition
Customer stickiness: CC tenants move out less frequently
Investment Opportunities for 2025
Immediate Targets (Next 6-12 Months)
Buy in Constrained Markets:
Chicago suburban infill with CC focus
DC/Maryland corridor submarkets
Seattle-Tacoma supply-constrained nodes
Select New York borough locations
Criteria: >92% occupancy, rising realized rents, <2% UC within 5 miles, CC-heavy unit mix
Selective Sun Belt Opportunities
Cherry-pick infill locations with:
Sub-2% UC pipeline within 3-5 miles
Evidence of promotional burn-through (narrowing discounts)
Avoid areas with multiple 2022-2024 projects still under 85% occupancy
Operational Alpha Opportunities
With search demand down and price sensitivity up, superior operations matter more:
Dynamic pricing: Calibrated to local search and lead volumes
Promotional ladders: By unit type, seasonality, and competitive response
Collections discipline: Faster resolution, better retention
Technology adoption: Lead generation, customer management, revenue optimization
The Supply Trough Opportunity
Here's the bigger picture: New starts fell 20% in 2024 and momentum remains weak into 2025. This sets up a much friendlier competitive environment for 2026-2027 as the development pipeline thins out.
The opportunity: Buy well-located assets now, before the "easy comp" tailwind shows up in operating results and pricing adjusts upward.
Target profile:
Infill locations in supply-constrained submarkets
CC-heavy unit mix (60%+ of total)
Expansion capability for future CC development
Strong existing customer base accepting rate increases
Risk Factors to Monitor
Demand Headwinds
Housing turnover remains soft: Fewer home sales = fewer storage "events"
Search activity down: Google searches for "storage near me" at lowest levels since 2020
Price sensitivity: Consumers more selective, longer decision timeframes
Operational Challenges
Promotional discipline: Risk of training customers to expect perpetual discounts
Delinquency uptick: Economic pressure on household budgets
Labor costs: Property management and maintenance wage inflation
Market-Specific Risks
Sun Belt supply lag: Lease-up overhang not fully cleared in fast-growth metros
Economic sensitivity: Recession could accelerate move-outs, delay rate increases
The Bottom Line: Selective Recovery, Not Broad-Based Boom
Self-storage is settling into a healthier equilibrium after the COVID disruption. National street rates are stabilizing, climate-controlled units are showing the first gains in two years, and the development pipeline is finally receding.
The winners will be operators and owners in:
Supply-constrained infill submarkets
Markets with CC-heavy unit mixes
Locations with embedded demand drivers (dense renters, turnover catalysts)
Assets operated with disciplined revenue management and promotional strategy
The key insight: This isn't a broad-based recovery where all boats rise. It's a micro-market story where location, product mix, and operational excellence determine outcomes.
In 2025, buy where the pipeline is light, the pricing engines are tilting from "discount to fill" toward "rent to value," and climate-controlled units can command premiums. Let the supply trough in 2026-2027 do the rest.
Your Investment Playbook
Immediate actions:
Map supply pipelines in your target markets (focus on <2% UC within 5 miles)
Screen for CC opportunities (leading rent recovery indicators)
Analyze operator performance (rising realized rents, stable occupancy)
Position for the supply trough (buy quality assets before comps improve)
The self-storage stabilization is real, but it's happening one micro-market at a time. The investors who win will be those who understand the specific drivers that separate tomorrow's rent growth from today's supply overhang.
Ready to evaluate self-storage opportunities in your market? The fundamentals are shifting, but success requires understanding the specific supply/demand dynamics in each submarket. Let's discuss where the real opportunities are emerging.
Brett Vogeler
Business & Commercial Real Estate Broker
"Finding value in markets others overlook"
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Need a roadmap? Reply in the comments section or send us an email for assistance. 360 Perspective Partners offers Professional Licensed Business, Commercial and Investment Brokerage Services along with providing Professional Licensed Community Management Services in Central Florida: https://my360perspective.com/
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