s we approach the 2024 rental season, I can’t help but feel cautiously optimistic. Have my rentals started to pick up? Not really. Are my street rates trending upwards after falling for the last 18 months? Nope. Are many ill-advised storage facilities in my markets still being built? Definitely! So, if demand is low, street rates are down, and new supply is up, why am I still cautiously optimistic? That’s just my feeling.

Although my feeling, here’s the evidence informing it. The housing market is the slowest it’s been in the last 40 years, but many people say they plan to buy or rent elsewhere this summer. Their life circumstances have changed, and regardless of what happens with interest rates, they’re ready for a move. It’s likely that this pent-up demand will materialize this summer.

As demand improves, rates will naturally start to rebound. While the REITs have been playing a dangerous game with extremely low web rates and then doubling or tripling customers’ rates after three months, I can’t imagine they’ll continue. It’s not good for their brands or the industry. When demand picks up, their rates should start to reflect in-place/achieved rates and buoy everyone’s street rates up to somewhere between where they are today and the 2021 peak. This is certainly what I hope happens; if not, there could be some serious implications for our industry.

As a family-owned company in it for the long haul, we’re by nature more conservative than most of the active groups in the acquisitions market. We have strict guidelines, yet we’ve still managed to buy 25 properties over the last few years. However, since the second half of 2021, we’ve found it more challenging to be competitive on broker marketed deals. Still, we offer on most deals in our markets. Until the last few months, we have come in 20 to 25 percent below where assets have sold. Fast forward to the first quarter of 2024, and even with our same underwriting guidelines, we have been competitive on almost every deal. For well-located, high-quality assets, and especially those below replacement cost, we are now willing to “stretch” to get to numbers that are maybe a little higher than we want to pay. For quality product, a slight “overpay” is nothing over a 10-year or longer hold. Even if the market doesn’t fully rebound until next year or 2026, we’ll be happy to own these properties because they will eventually perform.

I might look back at this article in a few years and comment, “What was I thinking!” as the world is an unpredictable place. Storage, however, still seems like a pretty good bet, and after a couple of slow years, we’re poised for a rebound.