pend a few minutes driving through greater New York and it’s easy to conclude that self-storage should be one of the region’s strongest real estate sectors. Millions of people live in apartments where every square foot matters. Contractors, small businesses, and growing families all need places to store equipment, inventory, or personal belongings. Demand continues to grow.
So why are so few new self-storage facilities being built? It’s a question I hear often, usually from people who assume that strong demand naturally leads to new development. On the surface, the formula seems simple: Find a site, build a facility, and customers will come. In practice, every stage of the process introduces another financial hurdle.
As both a developer and a licensed New York City general contractor, I’ve spent years building multifamily properties throughout the city while also developing self-storage facilities in Elizabeth and Pennsauken, N.J., and converting a multistory building into storage in Buffalo, N.Y. Those experiences have reinforced one lesson time and again. Identifying a market that needs storage is usually the easy part. Creating a project that makes financial sense is much harder.
Structural steel, fireproofing, life-safety systems, excavation, insurance, and the logistics of building in one of the country’s busiest urban markets drive costs upward well before a facility begins operating. Financing remains expensive, municipal approvals can take months or even years, and carrying costs continue to accumulate throughout the process. Based on projects we’ve evaluated, hard construction costs alone can approach $200 per square foot before land, financing, professional fees, and lease-up costs are fully reflected. Those experiences mirror broader industry findings in the 2026 Radius+ Self-Storage Industry Outlook, which points to rising construction costs and tighter capital markets as continuing obstacles for new development.
Another challenge is competition for land. Self-storage often carries many of the same construction and regulatory expenses as residential development, yet multifamily projects in New York City can benefit from programs such as the City’s “City of Yes” zoning reforms and the 485-x and 467m tax incentives. Those incentives improve the economics of housing projects, making them a more attractive use for many development sites.
Several years ago, developers could expect a broader pool of institutional buyers actively pursuing newly stabilized facilities. Recently, however, the investment environment for self-storage has become more selective. But that doesn’t mean institutional interest has disappeared.
The January 2026 acquisition of a 15-property New York City self-storage portfolio for approximately $1 billion demonstrates that high-quality, stabilized assets continue to command significant attention from investors. These buyers are placing greater emphasis on proven operating performance, however, which means developers must think over a much longer timeline, spending years acquiring land, navigating approvals, completing construction, and leasing up a property before an exit becomes realistic.
By the time a facility reaches stabilized occupancy, five or more years may have passed since the site was first identified. Throughout that period, developers continue carrying financing costs while adapting to changing market conditions. Patience has become just as important as identifying the right location.
That long view is one reason we continue pursuing self-storage opportunities. We believe the sector remains an excellent long-term business, particularly in markets we know well. Relationships with municipalities, contractors, engineers, and local professionals often shape a project’s outcome just as much as the real estate itself.
Metro New York still needs additional self-storage. Population density remains high, apartments continue shrinking, and businesses still need flexible space for equipment, inventory, and records. Those fundamentals haven’t changed.
Every successful project, however, still depends on balancing land costs, financing, construction expenses, operating income, and eventual exit value. And timing can matter just as much as momentum. In fact, waiting for the economics to align isn’t hesitation. It’s part of responsible development.
Building enough new facilities to keep pace will depend less on demand than on developers’ ability to negotiate the financial complexity necessary to bring a project to completion.