2026 Self-Storage Outlook: 10 Industry Expert Speak Out

Rising tides lift all ships, but in 2025 it was Warren Buffett’s addendum to that which mattered most: “It’s only when the tide goes out that you see who’s been swimming naked.” Last year revealed a number of economic truths and industry vulnerabilities, as assumptions that once worked began to show cracks. The question now is whether those stress points ease in 2026, or if the industry will face more headwinds. MSM’s panel of 10 industry experts weigh in on what you can expect in the new year and beyond. [Interviews held Oct. 25-Nov 20]

David Cramer, CEO, National Storage Affiliates

Sarah Beth DeFazio, Vice President of Sales & Development, Universal Storage Management

Housing mobility drives self-storage but mortgage rates have curbed a lot of that. Do you predict improvement?

MARGOLIS: Housing won’t fully recover in one week, month, or quarter. It’s a knob, not a light switch; I think it slowly gets better. The housing market’s effect on storage is also overstated. We survey our tenants on why they use storage; seasonally adjusted, 55–58% cite “moving today,” down from a 61–63% peak in 2021. So moving/housing demand is softer, but not the sole explanation or fix for current performance. Supply matters more; as development slows, that’s a real tailwind.

CRAMER: More rate cuts should lead to a lower mortgage rate and in turn more storage demand, however several markets have been overbuilt and it’ll take time to work through the excess supply. Atlanta, Phoenix, Las Vegas, and the West Coast of Florida are good examples where we don’t need any new building, but clearly several developers haven’t gotten the memo.

HANSON: The lack of mobility amongst homeowners has affected us significantly, and Fed rate cuts haven’t significantly improved self-storage rentals. We feel self-storage demand is down 18-22% the last few years. However, I’m optimistic that by Q3 2026, we’ll be in a better place; the housing market will improve and be more affordable. Even if it doesn’t, people that have been wanting to move and have been waiting for lower interest rates aren’t going to wait any longer.

Will 2026 be better for development?

HILL: 2026 should be more liquid from a debt perspective, and the cost of borrowing for construction is coming down from the high water mark over the past couple of years, which will help make deals pencil. That said, it's critical that developers use realistic inputs regarding rents, market occupancies, and lease up times. Plus, many input costs remain elevated so a lot of projects may still be difficult to justify for the foreseeable future.

CRAMER: I think cost pressures, extended lease-up time frames, market rental rates, and occupancy levels, combined with lender selectivity, will persist in 2026. However, the bigger issue is that there’s an elevated amount of recent developments that need to be absorbed before we get back to market equilibrium. That alone should give developers pause.

MARGOLIS: Self-storage is hyper-local, so there may be “holes in the donut” where developing a new facility makes sense, but overall we don’t believe it’s an opportune time to develop. Along with oversupply, development headwinds are significant: higher rates make debt more costly; equity is harder to raise and wants higher returns; entitlement periods are longer and more uncertain; construction costs remain elevated; tariffs could add more pressure; and immigration policy could lift labor costs. Another key factor: when public companies guide to essentially flat 2025 revenue growth, it’s tough to model 5% annual revenue growth in a development pro forma.

PARKER: Online rates, which most would argue is a reflection of demand, do not support new developments in most parts of the country. Physical occupancy and economic occupancy lease-ups are taking longer and will continue to until new supply is absorbed and stabilizes. Barring a significant macro shift, I anticipate many projects to remain on hold.

Should those sitting on properties hold or sell to try to recoup some of their investment?

HILL: It’s definitely situational and deal specific. Development is very submarket driven so some deals that did not make sense a few years ago could look a lot different now if the fundamentals in the market have recovered. Existing inventory is a different story; any time an investor is faced with a capital event, like a loan maturity or an equity partner’s exit, it is a natural moment to take census of the investment. Oftentimes we suggest our clients explore both sale and refinance options to make an informed decision.

PARKER: If you’re already sitting with existing facilities, I would stay put. The larger gap between lower online asking rates and in-place rates has made it harder than ever to project future value or upside. If owners can hold off until storage demand improves and rent strength increases, property values will likely increase. In the meantime, if owners aren’t already using institutional management, now is the time; having operational data and economies of scale can dramatically improve NOI.

NGUYEN: I think secondary and tertiary markets have a lot of potential. You’ve got these small markets emerging outside main cities where it’s too expensive to buy or housing supply is too low. They’re going to need infrastructure, including storage. Investing in these markets can be rewarding if that’s in your DNA.

How do we combat oversupply?

DEFAZIO: Too often developers target “hot” markets without doing their due diligence. The solution is simple but often overlooked: get a true feasibility study. We see countless people who either skip this step or think they’re getting one when, in reality, they’re only receiving a market summary. There’s a big difference. I also think that too often, investors from other industries try to handle due diligence on their own without understanding the unique dynamics of self-storage. Building a facility today is more expensive than many realize, and successful revenue management requires precision and experience.

POGODA: One of the biggest contributors to oversupply is the Excel spreadsheet. Developers can make those numbers say anything they want. Need a 25% IRR? You got it. Need to fill up in 15 months? Done. Now, if you’re really in the industry, you know that’s a joke. But for those determined to build, the numbers don’t seem to matter. At $130/sq.ft., unless they’re getting great rental rates in a truly underserved market, they’re sucking wind for a long time. I’d like to think oversupply will stop when people miss projections and lose their property, but it appears there is always someone who believes “if you build it, they will come.”

HILL: As rates come down, debt becomes more affordable and developers will be motivated to do what they do–develop. Even if we’re shouting from the rooftops, “Don’t overbuild!” they still will if the yields pencil. So, the risk for the industry is managing the pipeline sustainably. More precise market data regarding achieved rents and occupancies could help temper the rosy assumptions developers use in their models and help curb some borderline projects.

PARKER: Data sharing is definitely the long-term solution. More transparency into facility-level data like occupancy, attrition, and effective rates would allow developers to make more informed decisions. However, they should conduct their own market due diligence rather than relying on the free revenue and expense projections provided by REITs that want to sell their management services. Partnering with an honest, transparent operator can save developers from making huge mistakes.

STARR: While letting the market know about development projects you’re working on is helpful, you also need to be sharing your existing facility information. Meaning, if an area has a low square foot per capita, but your occupancy went from 90 to 75 percent last year and your in-place rents dropped by 15 percent, share that. By doing so, developers can see that even if peripheral metrics indicate opportunity, actual metrics don’t. It staves off competition you don’t want, and saves others from building where they shouldn’t. I predict we’re going to take a major leap forward in data transparency, truly understanding occupancies and achieved rents, so better investment decisions can be made.

Will developers driving new supply drop out as their projects fail to lease up or turn a profit?

CRAMER: We’re seeing many exit and sell projects earlier than planned because they are not hitting their pro-formas. We think many of these developers will move on to other property types.

HANSON: Some may drop out, but I also think others will be forced out. Through our broker network, we’re still seeing C and O deals hit the market. I’ve also seen more foreclosures this year than in my entire 20-plus-year career. A lot of these facilities have struggled to meet their debt-service ratios due to soft rental rates and the operational headwinds. Banks are taking them back and bringing in professional management companies like us to stabilize and lease them up so they can be sold.

DEFAZIO: More new owners whose projects haven’t performed as expected have reached out for guidance or complete third-party management. Some of these inexperienced developers will eventually leave the industry, but many can recover with proper support and education. We also expect a wave of facilities coming to market soon, as some owners purchased with minimal capital and now feel the impact of rising interest rates and tighter margins. A good audit may uncover hidden revenue opportunities and operational inefficiencies.

Do you think the threat of rent control bills will shift pricing strategies away from ECRIs?

PARKER: ECRIs have been shown to improve revenue, so I think some form of them is here to stay for now. I also don’t see a return to more transparent/conventional pricing anytime soon, unless that change comes from the top—the largest REITs. However, to avoid further legislation, I think we’ll see improved customer communication, along with various rental options. That said, as storage demand strengthens, we’ll probably see online asking rates increase.

STARR: ECRIs worked for a period, with achieved rates staying level despite declining street rates. Now, we're starting to see declining achieved rates. REITs and many other operators continue to use the ECRI strategy; in our opinion, it’s frustrating customers and hurting investors who don’t know which rate to underwrite. That said, we track around 67,000 active facilities, and independents far outnumber REITS and sophisticated groups, about ~41,000 to ~25,000. So, while there’s opportunity for more transparency amongst independents, when people think storage, they think of the major players. I believe the biggest long-term risk is upsetting half the customer base by misleading them on pricing. You can’t mess with people’s money.

POGODA: I agree, aggressive ECRIs are a black eye for the industry whether it’s a REIT or a smaller operator following their lead. Too often, any disclaimer winds up in the fine print, and a lot of renters are in distress and aren’t reading that. They just think they’re getting a great deal. That old bait and switch doesn't feel right to us; we don’t do that.

NGUYEN: Low prices attract customers, so initial discounts make sense in theory. Unfortunately, operators haven’t been great about outlining disclaimers. So, I think legislation/regulation will continue focusing on transparency. My hope is that the industry gets better at communicating what tenants can expect rate-wise so the government doesn’t step in and cap our potential. Transparency is also a great marketing tool: promotions like a 12-month rate lock at a higher move-in rate is a smart play and a trust builder.

MARGOLIS: California’s SB709 started as price control but morphed into a bill requiring certain disclosures, and we support that. Our disclosures were already strong; now they’re specified down to font and color. Our web customers want and respond to an initially discounted rate, and we’ll offer customers what they want as long as it’s fully disclosed that it may change upon notice.

What is your response to municipalities that put moratoriums on self-storage development?

DEFAZIO: It seems like some municipalities are genuinely trying to prevent oversupply, while others simply don’t understand the industry and its economic benefits. If you feel your community is unfairly targeting self-storage, get involved. Join your state association, contact legislative representatives, and speak before city councils. Be prepared to provide decision-makers with accurate information on demand, traffic impacts, tax contributions, and community benefits. That can make a tremendous difference.

POGODA: I don't believe moratoriums are ever in response to existing supply. When city leaders say no, it’s out of sheer prejudice against our property type; they don’t think storage belongs on their main streets. But today’s facilities are as nice as anything, and they meet a very real need. Of course, mixed use is always an option and you’re more likely to get approval with this strategy, but managing those spaces can be a pain in the butt.

CRAMER: I think it can be helpful to limit the amount of overbuilding, but in general we are not in favor of increased regulation.

Do you expect self-storage consolidation to continue?

HANSON: I think consolidation will continue, and SmartStop and Argus are a prime example. Scale brings more resources—improved operations, more access to technology, and better performance overall. Of course, this can make it more difficult for smaller companies to compete, but it also pushes them to up their game.

MARGOLIS: There has been tremendous consolidation already, and more ahead. Roughly ten years ago, about 13% of stores flew an institutional brand; today it’s around 39%. Large operators have structural advantages in data, technology, and scale. It’s almost an unfair fight. Public portfolios tend to run in the low-90s occupancy; many private operators sit in the low-80s. That’s one reason our third-party platform has grown: we added 174 managed stores net in the first two quarters and now manage over 1,700, mostly for 1-3 store owners who want our sophisticated platform benefits.

CRAMER: Self storage is a highly fragmented sector and I think the public REITs and a handful of large private operators will continue to drive consolidation. There are meaningful benefits from scale and at NSA we think we have an advantage as a consolidator in many of our secondary markets where we are the dominant player, and through our extensive industry relationships. The opportunities ahead for growth are very attractive. The risk is that the acquisition market gets too overheated and sellers get too unrealistic about pricing.

NGUYEN: Secondary and especially tertiary markets will likely always be heavily independent. If you’re a REIT, you have to ask: how much can we make on this particular asset, and what value does it bring us relative to the work involved? There’s a point of diminishing returns with smaller assets if you operate like those big companies. But others with the desire and operational mindset? They can make money in those markets.

How do you expect the growth of AI to impact self-storage?

PARKER: AI is already having a meaningful impact on our industry: How we operate and price facilities and how we adjust rates based on demand, competition, and market signals, which reduces reliance on discounting. We’re also developing an in-house predictive revenue model that uses demographic and trade-area data to estimate stabilized effective rent. Looking forward, I expect continued growth in these areas and companies that adopt these tools will have a clear operational and pricing advantage.

HUFF: In general, larger operators have always had an advantage over independents. AI is going to help level the playing field as independent operators grow in their understanding of AI and adopt the tools it offers.

HILL: From a financial perspective, if there is an “AI Bubble” as some analysts suspect, it could be the impetus for a major market correction akin to the housing bubble, which would most certainly impact the capital markets. A meaningful market correction will impact liquidity in the markets as lenders and investors move to the sidelines.

What do you think the outlook is like for self-storage managers in today’s environment?

POGODA: Labor is a challenge, and I don’t think employee expectations align with employer expectations as much as they used to. What managers once did versus what managers do now are not the same. There’s just not as many “professional managers” as there used to be; instead, people come and go.

NGUYEN: Data suggests that on average, manned facilities generate more revenue than unmanned facilities, even with caveats like size differences. For managers reading this, it’s not all doom and gloom. Treat it as an opportunity: embrace the tech, run your facility at a high level, and make it impossible to replace you with a kiosk. There will always be a place for skilled, passionate, customer-focused people in self-storage.

HUFF: Managers are absolutely still effective and the need for good people will never go away–their roles may just look different. When the self-checkout was first introduced we thought that all cashiers were going to be unemployed; but, there are still staff working the check-out lines, their role is simply different. The effective manager will learn how to grow with the technology instead of fighting against it.

HANSON: I get calls all the time from potential new clients that want to run their facilities unmanned, especially in boat and RV storage. Payroll is typically the second-largest expense on a P&L behind property taxes, so cutting staff is a go-to move versus, say, cutting advertising which helps generate leads. But there are alternatives. Instead of “unmanned” we coined the term “low-manned,” reducing payroll but not eliminating it, and augmenting the human touch with technology.

Do you expect the trend of unmanned facilities to continue?

HUFF: Yes and no. I think we’ve turned a corner from the Covid “touchless” era and realize there is a strong need for human touch. While unmanned facilities will continue to be developed, with great success, there is a new focus that we are seeing that centers around the customer and a human service aspect, even if this includes or relies heavily on technology.

CRAMER: We will always focus on meeting the customer in the way they want to be served. As we study the data, we may adjust store hours depending on our research and what shopping patterns tell us. This may lead to reduced store hours, being closed on certain days, or a completely unmanned store. However, the customer experience will remain a focus and dictate how we serve them.

DEFAZIO: The key is understanding your market, community, and tenant expectations, because unmanned simply doesn’t work everywhere. Now, when it’s done correctly with robust technology and security, a strong website, solid management software, tenant insurance options, and in-person maintenance checks—it can absolutely work. But even then, I rarely see the same level of revenue management precision or occupancy performance as a staffed facility.

MARGOLIS: Storage is a high-margin business; revenue matters more than expenses. If you cut payroll 15% and lose one lease a month, you’re roughly -2.5% NOI at our average rate. We let customers transact any way they want: call center, fully online, or in-person. A little over 30% of our tenants still walk in without interacting digitally. If no one’s there and they don’t use QR codes or kiosks, they might go across the street. We test part-time, reduced hours, and hub-and-spoke, but there’s no one-size-fits-all. A big Manhattan site will always be staffed; an annex in a smaller market may run with fewer hours.

How do we combat self-storage crime and protect the industry’s reputation?

NGUYEN: No matter what, you need visual deterrents like good lighting, cameras, access control, signage; you do not want a public perception that your property is just an unwatched building full of treasure. Whether you solve that with a manager on-site, tech, or a combination, the goal is to make it clear someone is paying attention.

MARGOLIS: Physical security is important, and technology can also help, with after-hours monitoring systems like Blue Eye. We even tried the cone-style patrol robot; tenants disliked it, so we stopped. That said, human presence still matters: unmanned or reduced-hours sites see more incidents.

HUFF: Security is one of the coolest ways that AI is making a difference in our industry. The technology that is used in camera systems today, that can detect and alert us to unwanted behavior, is going to continue to grow in popularity. The best way to combat our industry’s bad reputation is to address it head on. Take an active role in prevention on your property and communicate those intentions with your tenants and community. A sleepy property is an easy target. Be alert and don’t be afraid to talk about the measures you are implementing to thwart crime.

STARR: Combatting crime starts with smarter underwriting. Investors don’t think about how crime impacts repairs, maintenance, professional fees, onsite staff, cameras, security costs, and the like. If you’re buying in a high-crime area, you should budget for more security: Nokē doors, automated alarms, higher reserves. Most people underwrite every property the same way, but they need to adjust upwards of 30 percent to properly address crime; TractIQ has a total crime index showing which states, counties, etc. have the highest rates to help with these matters.

Do you expect the wave of institutional capital coming to self-storage to continue?

HILL: I do; the performance of the product type is stellar and that’s attractive to both lenders and investors. Unless that changes in a meaningful way, more capital will be looking for exposure to this CRE asset class on a relative basis.

HANSON: The capital is going to keep flowing into self-storage, and while that’s a vote of confidence in the industry, it definitely narrows the buyer pool. I hear from people constantly who say, “I’ve been trying to buy a facility for years but keep getting outbid by institutional groups or REITs.” They just can’t compete on price against that level of institutional money.

MARGOLIS: You see many sovereign wealth funds, PE firms, and investment banks at the storage conferences now. If that wave continues, it affects pricing. Despite interest rates moving up several hundred basis points, cap rates haven’t moved as much because demand for the asset class remains strong.

CRAMER: Self storage has become more of a core property type and will continue to attract institutional capital given the attractive return profile of the sector at lower levels of risk versus other property types. I think this will support valuations over time. Separately, this also benefits larger players who can partner with that capital looking to enter or grow in the sector.

POGODA: A lot of capital coming in is fair weather money, like the stock market–when things are great, everybody’s in; when things go south, they’re out. It’s also hard to deploy big chunks of money into the sector. A large investment firm may want to invest $500M in storage…that’s probably 50 properties, and it’s not easy to buy 50 properties. So consolidation will continue, but as a shifting round robin, with different players and the same properties changing hands.

That’s A Wrap

Big thanks to our 2026 panel for their time and insight! What do you think 2026 will bring? Email brad@modernstoragemedia.com and we may feature readers’ thoughts in an online exclusive. Here’s a final thought from Mr. Pogoda: “Everything is a cycle, and we’ve been in a downturn for a while. I’m optimistic that good times are ahead.” Cheers to that!