he self-storage industry has enjoyed an astounding upward trend since the beginning of the decade. During the COVID pandemic, it seemed like everything was unprecedented. The word was everywhere; newscasters repeated it in every news story. In storage, the flourishing was truly unparalleled. Mom-and-pop shops were pushed to higher tax brackets. Big box names proliferated even more across the country, and startup tech companies offering related software (cybersecurity, third-party management, marketing) all grew exponentially.
Everyone raced to the bank, and more developers jumped at the opportunity to get their share from the golden goose. But everything that goes up must come down. It’s a tale as old as time, and anyone with enough life experience could have predicted that such growth would eventually stabilize. Yet, even within that prediction, there are a lot of questions. Let’s look at the main variables.
Tyson Huebner, director of research at Yardi Matrix, states that such a reduction will likely gradually take place, but to take some of the numbers with a grain of salt. “There has been a 19 percent decrease in supply in 2026 when compared to 2025, and it’s predicted that there will be another 14 percent decrease next year and a similar decrease in 2028,” he says. “However, the forecast is going to be less accurate the further out you go.”
While Huebner concedes that the numbers may slightly vary, depending on which markets you operate in, he notes that the recent decreases in 2026 have been higher than in the previous cycle (2019 to 2023). He also points out that the supply pipeline is more concentrated in the South, saying, “There are some markets that will face the most supply they’ve ever faced in a 12-month basis. Even now, performance has been struggling and it’s taking longer to lease up.” The problem stems from the areas being oversupplied for one, two, and even up to three years.
Huebner adds that a main driver of this oversupply was the boom during the COVID-related migrations. This massive growth attracted many developers with no prior self-storage experience. “Close to 50 percent of what’s been delivered this year has been built by developers working on their first self-storage property,” he says. “And even now, when I go to industry conferences, I’ve met many developers asking me about self-storage, as they try to start learning about the industry. A lot of them are hyper focused on the double-digit growth and the surge during the pandemic, but that’s not happening anymore.”
Drew Dolan, principal and fund manager at DXD Capital, a data-driven private equity real estate firm that specializes in the self-storage sector, cautions that while the numbers of new developments are going down, the data varies depending on where you look. “Radius+, Storetrac, Yardi—they are consistently saying that supply is going down, with slightly varying numbers,” he says. “The most aggressive decline I have seen is from Radius+, which shows a greater than 70 percent decrease in deliveries from 2023 to the 2026 projections. That’s a massive decline.”
Yet, Dolan points out that the current numbers are following the oversupply bubble. “I’m not surprised we’ve had a swift downturn, because none of the factors that were tailwinds in ‘21 and ‘22 exist today—low interest rates, robust home sales, self-storage occupancies at an all-time high. Today, we have the opposite—mostly headwinds.”
As an example, Dolan mentions that home sales are at a 40-year low, and this has affected even seasonal spikes in storage rentals. “A lot of times, people move in the summer because kids are out of school. I would say that one of the bigger headwinds for self-storage is that when there are fewer movers, there are fewer people needing to use self-storage.”
While this spells problems for new development projects, Dolan says it’s a silver lining for existing facilities. “The offset is that people are staying longer in their homes, so those who were already using storage are staying longer in their units.” In fact, real estate investment management firm Heitman, LLC, shared that their average stay is now 24 months, up from 18 months pre-pandemic.
Bills notes that REITs have communicated the same during earnings calls in the last two quarters. This has caused performance of existing square footage to improve, as there’s been a gradual decrease in new projects. In fact, this performance improvement has mostly come from the supply diminishing than from top-of-the-funnel demand.
“We’ve also tracked another 25 million square feet of projects in planning phases—before construction, when developers are looking at feasibility—where there has been no update in activity in the past 18 months, either,” says Bills. “This could be due to several reasons, but it’s noteworthy.”
And when it comes to self-storage projects that are already under construction, Bills shares that TractIQ is tracking 8 million square feet that also haven’t had an update in the past 18 months.
Huebner indicates that another issue with the pipeline is that it’s taking up to five years to develop a project. “You have developers who underwrote a project when storage was still at the peak,” he says, “and now it’s a very different market. I call it a supply hangover. It’s not something we’ve really experienced before.”
A lot of markets are dependent on migration and home sales for demand, Huebner stresses, and newer projects are not going to get that kind of demand as so many storage facilities did during COVID. “It’s going to be a long recovery for those markets,” he says. “A lot of them are the top 50 markets REITs are focused on, and they’re going to have some struggles from new supply.”
Dolan agrees that the change in the market has mainly hindered new developments. “The Achilles Heel of self-storage is oversupply. Some markets got oversupplied, and that’s a point of vulnerability at the moment.”
As examples, Bills points out that in Minneapolis, rental rates are up 10 percent year over year for both street and web rates. On the other hand, Tampa has street and web rates that have decreased by more than 13 percent year over year.
For his part, Huebner shares that a lot of the developers are in concentrated markets such as college towns. “In my previous role at an investment firm, we bought a development in Columbia, by the University of South Carolina, and move-in rents would shoot up 100 to 200 percent in the summer and drop down in August/September,” he says. “Markets like Tallahassee, Tucson, and Athens are going to take even longer to lease up, and it’s going to fluctuate with seasonality.”
All things considered, Bills believes that the writing was on the wall from day one. “COVID was such a big boom. I don’t think anyone believed that would last forever. The bigger story over the last few years has been about how interest rates have affected the storage industry. There’s no doubt that demand has slowed and values have decreased in the post-COVID era. However, the data over the last year has supported the narrative that we’re seeing some stabilization.”