Self-Storage Market Slows: Operators Face Pricing & Occupancy Pressure

After several years of strong demand, the self-storage industry is adjusting to slower leasing activity, declining advertised rents and lingering supply pressures. Industry experts say the market is moving toward greater balance, but a broad-based recovery is likely to take time and vary by location.

National advertised self-storage rates declined 1.8% year over year in September, reflecting continued pricing pressure and softer demand, according to the October 2026 Yardi Matrix Self-Storage National Report. The analysis, based on data from 2,324 properties, found that rate performance improved from August in half of the top 30 metropolitan areas tracked by Yardi, although annual growth remained limited.

Non-climate-controlled rates increased year over year only in New York City and Salt Lake City. Climate-controlled rates rose only in Austin, Texas, and New York.

The slowdown represents a shift from the demand surge of several years ago, when elevated housing costs and a strong housing market prompted many consumers to move into smaller homes and use self-storage for belongings that would not fit in their new residences.

Supply Growth Slows, but Pricing Remains Under Pressure

Although new supply is moderating, the slowdown in construction has not yet translated into meaningful rate improvement. The trailing three-year share of new deliveries declined year over year in 21 of Yardi's top 30 markets in September.

However, lease-up properties are reportedly taking longer to stabilize, delaying the potential benefits of reduced construction activity, according to the report.

Approximately 43.8 million net rentable square feet of self-storage space was under construction nationwide at the end of September, equal to 2.1% of existing inventory. Only two of the top 30 markets — San Diego and Washington, D.C. — recorded month-over-month increases in construction activity. The remaining markets were flat or declined.

REITs Continue More Aggressive Discounting

Publicly traded self-storage operators have been more aggressive in reducing advertised rates than their non-REIT competitors. REIT asking rates declined 3.3% year over year in September, compared with a 1% decrease among non-REIT operators, according to Yardi.

Nicholas Malagisi, SIOR, managing director of Storage Realty Advisors in Buffalo, New York, said occupancy among the largest self-storage REIT operators has fallen from approximately 94% to 96% nationally to 88% to 90%. In response, operators have used steep discounts and promotional rents to attract new tenants.

“This discounting led to no or negative NOI in recent years,” says Malagisi. “In select markets, and for select properties and sizes, some operators are beginning to diminish their promotional rents, and larger operators are seeing positive NOI growth,” he adds.

Rental Rate Growth Tops Industry Concerns

Economic conditions are adding to the challenges facing operators. The Federal Reserve's Sept. 16 quarter-point interest rate increase, along with the possibility of another hike by year-end, could create additional pressure for owners with maturing loans who need to refinance.

However, results from an interest rate impact survey conducted by the Self-Storage Association (SSA) the week after the Fed's action suggest that operators are focused on broader market conditions as well. Respondents identified rental rate growth as their leading concern, followed by occupancy.

For owner-operators, slower home sales, tighter consumer budgets and increased competitor discounting are contributing to the pressure. Despite those concerns, 63% of survey respondents expect industry conditions to be the same or better a year from now.

Owners Face Decisions About Holding or Selling

Ben Vestal, CEO of Argus Self-Storage Advisors in Greenwood Village, Colorado, sees the current market as a potential turning point for independent owners. He said operators must determine whether they have the financial resources and competitive position to hold their properties through a prolonged period of uncertainty or whether selling is the better option.

For owners considering a long-term hold, Vestal recommends evaluating whether they are prepared to retain the property for at least five years, have financing secured for a contractual period of three to five years and possess sufficient liquidity to cover debt service if revenue declines by 10% to 20%.

He also advises owners to assess whether their facilities rank among the five most competitive properties in their three-mile submarkets and whether those markets can absorb another competitor.

“If you cannot answer ‘yes’ to these questions, then you will likely have a problem holding the property for a long period,” advises Vestal. “If you answered ‘no’ to more than one of the questions, you consider selling and moving on from the self-storage sector.”

Selling may also make sense for owners approaching retirement, seeking greater liquidity or looking to reduce investment risk, particularly if they have concerns about local market conditions or the broader economy.

“Factors to consider include current market prices and the rise in cap rates, which currently range from 5.75 to 8.5, depending on the market and location of the property,” he adds.

Although buyers remain active, Vestal said they are increasingly selective and focused on properties priced in line with current market conditions.

“Serious buyers today are still active and well capitalized, knowledgeable about self-storage valuations and, for the foreseeable future, are only looking for projects that are priced correctly,” says Vestal. “If you expect to sell in today’s marketplace, you must be realistic on your pricing, be prepared to move quickly and be emotionally ready to recognize the market as it is.”

He cautioned owners against ignoring market conditions and delaying decisions.

“This is often a popular choice when presented with rather stark and limited options,” Vestal says. “However, the other two options give you some ability to protect the fruits of your labor and investment and are very likely to improve your future options.”

Recovery Expected to Vary by Market

Industry observers anticipate a gradual normalization of supply and demand rather than a quick return to the conditions that fueled the sector's recent growth.

“Self-storage appears to be moving toward a better supply-demand balance, but we view the next several years as a normalization rather than a rapid rebound,” says Doug Ressler, manager of business intelligence for Yardi Matrix. “Construction is slowing nationally, which removes an important headwind, but softer demand and the time required for recently delivered properties to lease up continue to pressure rates,” adds Ressler.

A stronger housing market and increased household mobility could help improve occupancy and eventually restore pricing power as construction activity moderates. However, the timing will depend heavily on local conditions.

Markets with limited new supply and stronger population growth, housing activity and multifamily fundamentals are likely to recover sooner, Ressler said. Markets in the Sun Belt with heavier supply pipelines could take longer to rebalance.

Despite the current slowdown, Malagisi sees long-term demand fundamentals supporting the sector.

“Self-storage is here to stay,” says Malagisi. “One in nine households in America have a self-storage user, with the national average of self-storage use now somewhere between six and seven square feet per capita,” continues Malagisi. “Usage has moved beyond the original ‘three Ds’—death, divorce and displacement, making it a strong investment category.”