Rental rates have shown a slight dip over the past month, but the year-over-year (YoY) trend paints a more pronounced picture. Street rates have declined 2.5 percent to $1.38 per square foot (SF), while online rates have fallen 5.4 percent to $1.14 per SF, signaling an increasingly aggressive digital pricing approach. At their peak in Q3 2024, online discounts reached 20 percent before settling at an average 17 percent discount—a higher level than the previous year and part of a steady upward trajectory over the past three years. These trends highlight the growing importance of digital-first pricing strategies, as operators adjust incentives to attract tenants in a price-sensitive environment.
A major focus in the industry today is existing customer rate increases (ECRIs) as operators look to offset lower move-in rates and deep lease-up discounts. With interest rates somewhat stabilizing and housing trends shifting, long-term pricing optimization has become a priority. Leading REITs and operators are strategically balancing competitive introductory pricing with structured ECRIs, allowing them to sustain NOI growth even in competitive markets.
Self-storage remains one of the strongest performing real estate asset classes, ranking just behind data centers in investment appeal. Despite challenges such as market saturation, rising development costs, and regulatory pressures—including higher property taxes and stricter zoning laws—long-term demand remains robust. Key drivers include an aging population downsizing, evolving homeownership trends fueling decluttering, and increasing institutional investment, which continue to support the sector’s growth. While short-term pricing pressures persist, stable occupancy rates reflect self-storage’s adaptability, reinforcing its position as a resilient and attractive investment.
Climate-controlled (CC) units saw a 1.3 percent decline in pricing in a month’s time, likely due to reduced seasonal demand during colder months, while non-climate-controlled (NCC) units remained stable at $1.23 per SF. Over the past year (January 2024 to January 2025), both CC and NCC unit rates declined by 2.4 percent, mirroring the broader downward trend in street rates.
The top 20 MSAs account for 38 percent of the nation’s total NRSF, with Dallas and Houston leading the market, each surpassing 90 million square feet. Pricing trends across these key markets vary significantly, shaped by supply growth, demand drivers, and competitive pressures. While some MSAs remain undersupplied, supporting stable or rising rates, others face pricing declines due to increased competition and ongoing new development. Nationally, street rates have fallen 0.7 percent month over month (MoM) and 2.5 percent year over year (YoY), reflecting the broader impact of supply-demand imbalances.
MSAs with elevated square footage per capita and high levels of new development are experiencing the sharpest rate declines. Dallas (-9.5 percent YoY), San Antonio (-13.3 percent YoY), and Atlanta (-15.1 percent YoY) have seen significant downward pressure as new supply enters the market, increasing competition and lease-up challenges.
Despite the broader industry slowdown, some MSAs have maintained rate stability or even posted growth. Tampa (4.4 percent YoY) and San Francisco (1.3 percent YoY) are among the few markets where pricing has held firm, reflecting strong local demand and more balanced supply levels.
MSAs with a high concentration of REIT-operated facilities (50-plus percent market share) tend to employ more aggressive online pricing strategies. In Philadelphia, REIT-controlled properties discount online rates by an average of 19 percent, while Atlanta operators have implemented an average 25 percent online discounting strategy. These same MSAs are also expected to see some of the highest supply growth in 2025, with new supply increasing between 8 percent (Washington-Arlington and Miami) to over 13 percent (Atlanta), putting further pressure on pricing.
The four MSAs with the highest square foot per capita (12-plus SF per person) are all in Texas. While Houston posted a modest 2 percent YoY rate increase, other major Texas markets (Dallas, San Antonio, and Austin) saw some of the steepest rate declines over the past year. With new supply expected to increase by an additional 4 percent in these metros, further pricing compression is likely as properties compete to stabilize lease-up rates.
MSAs along the East Coast, including New York, Philadelphia, and Washington-Arlington, remain attractive for future development. Despite ongoing construction activity, these markets still fall below the national average of 7.8 SF per capita, signaling further room for growth.
According to U-Haul’s Growth Index, South Carolina was the No. 1 growth state in 2024, surpassing Texas after three years at the top. Inbound moves (51.7 percent) were driven by affordable living; job growth in manufacturing, tech, and health care; and a favorable climate. Texas, North Carolina, Florida, and Tennessee follow, while California leads in net out-migration for the fifth consecutive year. Migration remains a key driver of self-storage demand, with relocations fueling both short- and long-term storage needs. As the Southeast and Southwest attract more movers, out-migration from California, the Northeast, and Midwest may intensify pricing pressure in oversupplied markets. Operators tracking these shifts can refine pricing, optimize occupancy, and identify growth opportunities in high-demand regions.
While challenges persist, self-storage continues to demonstrate resilience, with operators who leverage data-driven pricing, optimize operational efficiencies, and identify high-growth markets best positioned for sustained success in 2025 and beyond.