Self-Storage in 2025: Challenges, Trends, and a (Possible) Turning Point
The self-storage industry is stepping into 2025 with a mix of optimism and hesitation. High interest rates, shifting supply dynamics, and uncertain demand are all at play. After going through the Matrix National Self Storage Report – January 2025, here’s what’s worth noting.
The Market Vibe: Some Good, Some Not-So-Good
Industry experts gathered in NYC earlier this month for the New York Self Storage Association and KeyBanc Investor events, and the mood was noticeably more cautious than in previous years.
- The Good: Occupancy seems to be stabilizing, and rent growth is starting to turn a corner in some areas.
- The Not-So-Good: The Sun Belt (Florida, Atlanta, etc.) is dealing with supply and demand imbalances, and high interest rates are making transactions tricky.
Still, storage operators expect 2-4% revenue and NOI growth in 2025, thanks to supply easing up and rent growth improving.
Rental Rates: Still Dropping, But Slowing Down
December marked the 27th consecutive month of year-over-year declines in rental rates, but here’s the silver lining: the rate of decline is slowing.
- Nationally, rates dropped 2.3% YoY—not great, but better than the -3.5% average over the past 12 months.
- Some bright spots: Tampa and D.C. actually saw non-climate-controlled (NCC) rates increase 0.2% YoY.
- Larger storage units (10x20, 10x30) are performing better than smaller ones, which is worth keeping in mind.
Bottom line? Prices are still adjusting, but they’re not free-falling anymore.
Construction & Supply: Easing Up, But Still a Factor
Developers are tapping the brakes a little, which should help stabilize rental rates.
- 3.1% of existing storage stock is under construction, slightly lower than last month.
- Tampa, Orlando, and Atlanta are still oversupplied, making rent growth tougher in those markets.
- New York and Nashville had zero new deliveries in 2024, which helped rents hold up. That said, big projects are in the pipeline, which could shake things up.
Which Markets Are Thriving (and Which Are Struggling)?
- Big winner: Tampa, with a 0.4% YoY increase in advertised rates, thanks in part to hurricane-driven demand.
- Other standouts: Minneapolis had the strongest month-over-month rent growth (+0.6%), thanks to limited new supply.
- Struggling markets: San Diego, Las Vegas, and Atlanta saw the biggest rent declines, largely due to an oversupply of new units.
Investing in Self-Storage: Capital’s Out There, But Deals Are Slow
There’s still plenty of capital floating around, especially from private debt funds and new investors. But with high interest rates keeping some sellers on the sidelines, deals aren’t moving as fast.
What’s Next?
For operators and investors looking to navigate 2025 successfully, here’s the game plan:
✅ Adjust pricing strategies based on regional demand.
✅ Focus on larger units, which are holding up better.
✅ Watch new supply closely—being in an oversupplied market could mean a tougher year.
Self-storage isn’t going anywhere, but the industry is definitely in a transition phase. The next 12 months will be all about playing smart, staying flexible, and keeping an eye on the long game.
Thank you for your interest. Have questions regarding the local market? Navigate the Real Estate Market with confidence, and contact us at Cliggitt Valuation for your appraisal, consulting, and valuation needs today.
Mike Cliggitt, MAI, MRICS, CCIM
813.405.1705 | 863.661.1165 - Direct Lines
findvalue@cliggitt.com
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