he self-storage industry has been on a wild ride in recent years. Following record demand and rent gains triggered by the pandemic, conditions normalized as interest rates rose and the housing market slowed. However, the always resilient industry is still experiencing activity in terms of development and investment in new facilities. But is it time to buckle up again? The possibility of tariffs looms, mass deportation threatens to thin the labor pool, and a spate of natural disasters leave a lot of lingering questions. To provide some answers, several industry experts have weighed in on what to expect and what kind of impact these events may have on the industry.

Just like self-storage demand, the cost of both materials and labor have been experiencing fluctuations over the years. There are periods of increases followed by stabilization, often due to economic conditions, labor shortages, and disruptions in supply chains. This volatility can make planning and budgeting more difficult for contractors.

“We’ve had some supply chain issues lately, but it has been nothing like what we experienced during COVID, when demand was at an all-time high,” says Ted Culbreth, vice president of sales for SBS Construction. “Plus, steel prices have moderated, and that’s been helpful. Overall, the project superintendent may still need to do some wrestling to get materials on site and on time, but I think that’s just the world we live in now.”

Marc Goodin, president of Storage Authority, feels that development is being hampered by high interest rates and construction costs more than anything else. He states that pre-COVID, steel could be acquired for $65 per foot, and then it peaked at $100 to $115 per foot before settling at about $80 to $95 per foot. “So, costs are down from the peak, but still significantly higher than the pre-COVID days,” says Goodin. “Of course, you can get quotes for less, say $75 per foot. They do that just to get called back for the bid. But then you get the plans, and with the addition of special features and whatnot, it’s back up to that in that $80 to $95 range.”

If you’re determined to build, consider phasing the project or value engineering ideas that provide the necessary function in a project at the lowest cost [i.e., substituting materials and methods with less expensive alternatives without sacrificing functionality or redesigning a building’s framework to use fewer materials without compromising strength]. “There are different strategies that contractors and owners can discuss to make their deals pencil,” says Goodin.

On the other hand, Tarik Williams, president of TLW Construction, reports that he’s been able to secure raw materials, including steel, at prices close to pre-COVID. “It’s been great, and the lower cost of steel has helped a lot of deals pencil,” he says. “Concrete has also come down $30 to $40 per cubic yard over the last couple years.”

Nicholas Bergmann, vice president of Capco General Contracting, says that although they saw a pause in new projects during quarter four leading up to the election, they’ve been very busy since then. “I think developers just wanted some clarity on who was going to be president. Once we got that, they began making their moves.”

Labor does continue to be an issue for Bergmann, however. “We’ve been struggling with labor for about 20 years,” he says. “The rates remain elevated, and I don’t see them coming down. There’s a shortage of workers, and they need to make enough to pay for the high prices of consumer goods that we’re all dealing with right now.”

The deportation of undocumented immigrants, something Trump put into immediate action as soon as he assumed the presidency, also has the potential to impact labor. “I don’t know that it will drive up costs, but the labor supply will certainly go down,” says Bergmann. “Construction relies on immigrant labor. And if it continues to happen as advertised, we will feel it.”

The California wildfire is the third costliest natural disaster of recent years, trailing the expense and damages caused by Hurricanes Helene and Milton. California’s forests, many of which have been reduced by the fire, are a vital source of lumber. While storage facilities typically use little to no lumber, that doesn’t mean the impact of the fires won’t be felt. Labor, for example, may be impacted for builds outside the Golden State.

“Storage construction is always hampered when there’s a natural disaster because we’re fighting for a number of in-demand trades, who are now pulled in different directions,” says Culbreth. “So, you have to plan for it. We work in Texas, Arizona, Louisiana, and Florida. We know someplace is probably going to get hit by a hurricane each year. That’s just part of the business. We may lose trades for a hurricane. They may leave, say Dallas, and head to the gulf coast to work, but I don’t expect our trades to go out to California. But we’ll see.”

Williams adds, “After big hurricane events there can be a labor vacuum, with contractors chasing that and pulling labor and materials from other places, so you see a dip in availability or an increase in costs. But the wildfires were mostly residential, and I don’t see a lot of overlap between residential and commercial builders. The labor pools are usually entirely different.”

Williams isn’t too phased over the cost of materials increasing, whether from the hurricanes or the fire. “Normally you see that right away, and I haven’t heard anything,” he says. “I think it’s due to the general slowdown in commercial construction overall. We’re at the phase of a cycle where subcontractors are calling asking about work, whereas, three years ago, you had to call on those work relationships to be sure you had coverage. So far, I’ve seen no impact from any of these catastrophes.”

There’s another potential concern over potential tariffs on imported lumber, however. The high price and a shortage could encourage a shift toward alternative building materials. “We don’t use any lumber, or very little, so that doesn’t concern me,” says Culbreth. “But I could see the fires impacting concrete, because residential uses a lot of it.” Moreover, the housing market is a big driver of concrete pricing and its availability. “They’re going to have to get in line over in California to get it.”

When the rebuilding begins, regulators will likely require higher safety standards to protect against future fires. This could mean installing a steel frame or metal roof, for example. “I mean, after every hurricane, there are more stringent standards we have to follow, so why not after a wildfire?” asks Culbreth. “Following a storm, we may have to build at a higher elevation or move further from flood plains or the coast. So, I could see some of the California rebuilds using metals, because I don’t know how much more could be done with lumber to mitigate fire damages.”

Culbreth is interested in seeing how California streamlines the permitting process to allow for rebuilding. He says it’s an arduous process in the states he works in, and he’s heard it’s much worse in California. “There’s going to be a tidal wave of work for some municipalities,” he says.

Since taking office, President Trump had been threatening tariffs on goods from other countries. On Feb. 1, he ended weeks of speculation by announcing 25 percent tariffs on all imports from Mexico and Canada and 10 percent tariffs on all imports from China. By the morning of Feb. 2, things changed. Trump announced that tariffs on Mexican and Canadian goods would be suspended by 30 days, so long as the countries sent forces to their borders to fight drug trafficking and illegal immigration (tariffs on Chinese imports would proceed as announced). As of this reporting, these deals remain in place.

“Tariffs are a concern, especially when it comes to steel,” says Williams, “but right now I think it’s more saber rattling versus reality.” So far, at least when it comes to Mexico and Canada, it seems he was right.

Culbreth also didn’t seem overly worried. “We went through this during Trump’s first round, when he put 25 percent tariffs on steel from China,” recalls Culbreth, referring to Trump’s two-year trade war with China that began in 2018. “Most steel does come from other countries, so there is some cause for concern, but developers found a way then, and they will again, regardless of what happens.”

“The price of supplies has been declining, which is great, so most of us in the supply chain are a little nervous about these tariff talks,” says Bergmann, referring to the China trade war from Trump’s first presidency. “The tariffs Trump instituted on China back then, combined with the high demand for self-storage during COVID, drove up steel prices. And American companies can’t produce enough metal to support the entire country. It’s being used for auto manufacturing, appliances, and many other industries, not just self-storage, so we all wound up fighting for raw material.”

This time around, should the tariffs become a reality, it may not be as bad. “Demand isn’t as strong as it was years ago,” Bergmann says, “and construction costs are coming down. Hopefully, if prices do increase, it won’t be as significant or as volatile.”

Still, the threat of tariffs means it is important to proceed with caution. “We need to communicate with suppliers and contractors,” says Bergmann, “because when people are prepared, they can manage. What hurt us before was we weren’t prepared.”

Kris Bennett, host of The Storage Investor Show, sums things up well. “If the Trump tariffs go into effect in Mexico and Canada, it will definitely reshape the market,” he says. “If we have rising costs, then we’ll have inflationary pressure and higher interest rates that remain longer. That’s going to spell some trouble down the road. We may see less development, we may need to go after more acquisitions of stabilized properties and put lower leverage on them, and we may need to hold them for a bit longer as we ride out this wave.”