here are plenty of long-term investment opportunities in real estate, but investing in self-storage opportunities remains one of the more lucrative prospects, especially in college towns. Among many suitable markets, college towns stand out as a golden opportunity for owners and investors. Coupled with seasonal trends, the continued demand from the local populace and students makes these locations especially attractive.

Colleges also provide a steady influx of new clients each year, making self-storage a viable long-term investment opportunity. This article will explore why college rentals can be a great opportunity for self-storage investors.

Students, professors, and locals always need additional storage space. Many students don’t have enough storage in their apartments, rental homes, or dorm rooms for seasonal clothing, sporting goods, recreational equipment, and other objects they don’t want to leave at their childhood homes.

Plus, the educational landscape of the United States is geographically dispersed. If you want to invest in self-storage opportunities in college towns, you’ll find over 5,000 universities and colleges nationwide.

One of the main reasons this area is fertile ground for self-storage investments is that most students go home for the summer break. However, many don’t want to drag their belongings back home, so they look for self-storage during the summer. Since there are always new students, each year brings a steady stream of dependable demand.

Universities and colleges are dependable employers, but they’re far from the only ones in their areas. The existence of a college generates an entire microeconomy of nearby services and products for students. Depending on the specifics of each college, other industries may naturally congregate around it. Great hospitals are often found near high-end medical schools and tech startups are usually based near engineering colleges.

This variety of available high-paying positions results in a local population with plenty of purchasing power and disposable income. For self-storage investments, this is a positive sign for two reasons.

First, locals have enough money to rent self-storage units without issue. Perhaps more importantly, a strong local economy means more consumption overall. People buy more things on average, increasing the local demand for additional storage.

Since strong local economies are important for self-storage businesses, it’s great that universities are great economic drivers. Besides county seats and state capitals, they’re some of the most potent economic drivers for their surrounding area.

More people are attending college than ever, which means consistent (and rising) demand for housing in the nearby area. As a result, real estate prices are generally high in college towns, especially if the supply is low and there isn’t a lot of new housing.

This results in expensive real estate in the area. And while this can be problematic for students, it’s great for self-storage investors. With higher property prices, there’s a lower chance you’ll encounter too much competition. Fewer people can afford to construct storage facilities.

On the other hand, expensive real estate also encourages homeowners and renters to maximize the use of every square foot. You can’t afford to waste space when you can’t afford a huge home. That also drives up the demand for self-storage in the area.

Self-storage services are quite widespread among students in the United States. Per NSA Storage research, more than 55 percent are renting self-storage or have done so, which confirms the microeconomic logic laid out previously.

Interestingly, most college students who use self-storage attend school in their home state, even though their parents’ houses are usually within driving distance of their colleges.

It also seems that the practice is particularly common among West Coast students, as over 25 percent of all students who use self-storage are from that area. However, most users also opt for self-storage only for a short while, usually during a school break. In almost half of cases, students rent storage for less than three months.

From a marketing perspective, it’s important to note that parents are essential market stakeholders; in over 50 percent of the cases, they’re the ones paying for the storage. Also, pricing is the No. 1 deciding factor when students opt for a specific storage solution.

Besides affordability, over 60 percent of students who use self-storage appreciate safety and cleanliness, like most self-storage renters.

When choosing the right location for an investment, research the local competition and the proximity to relevant student populations. You should also consider other factors, such as the initial investment costs, maintenance expenses, and local regulations.

Regarding marketing, consider advertising on social media (specifically TikTok and Instagram) and using creative video content. You can also attract new customers with student-specific discounts.

Student populations are a potential gold mine for self-storage investors if you price your storage properly, market it professionally, and choose the right location.

hen tenants rent a self-storage unit, they’re potentially preparing for significant life events, such as moving or traveling abroad. No matter the reason, even if they just simply need extra space to store their personal property, they’ll likely need packing supplies to keep their belongings stored safely and effectively. Items like boxes, bubble wrap, mattress and furniture covers, tape, and locks are essential for a smooth storage experience, amongst other packing items.

The purchase of these products is almost a guarantee, especially for first-time self-storage renters. After all, no one wants to pay for a self-storage unit only to risk exposing their belongings to dust, dirt, mold, and, in some cases, even pests. To avoid the damage caused by improper storage, tenants will certainly be interested in buying products that will help keep their items in prime condition. This makes on-site retail offerings highly convenient for tenants and opportune for facilities seeking an extra source of income.

But convenience aside, is selling packing supplies and other retail products a smart business decision for self-storage businesses? What’s the best way to source these items? How should they be priced to remain competitive yet profitable? Industry specialists interviewed for this article divulge the best practices.

It’s important to consider that quality and durability are essential when selecting products to sell because renters will associate these items with your business. If they fail to meet expectations, it may reflect negatively on the facility. When choosing which products to sell, prioritize reliable, long-lasting options that protect tenants’ belongings effectively. But where can high-quality products be sourced for resale?

The first step in identifying a reliable supplier is to establish a budget. Determine your ideal amount for purchasing inventory and use this as a guideline during your search. Once the budget is defined, research suppliers that align with your budget, offer good quality products, and provide great service. It’s important to inquire about their inventory restocking schedules, how they source their products, and how the delivery process works. Reputable suppliers should be able to provide client references. Positive feedback from other businesses can serve as an indicator of the supplier’s reliability and quality of service.

For instance, Lock America, a manufacturer and distributor of locks and security hardware for various industries, emphasized the importance of premium locks. “By offering quality security products to your renters, you establish your preferred level of security at the site,” says Richard Morahan, Lock America’s marketing consultant. “A collection of cheap, renter-chosen locks invites thieves and makes your site look less secure to the security-conscious prospect. If you make it easy for your renters to use quality locks, you will be secure, and you will look secure.”

Richard Schwartz, the president of Advantage Box, explained that tenants are “hot leads” for purchasing moving items. “Instead of sending customers elsewhere, self-storage operators can seize this opportunity to secure a complementary sale and generate a secondary revenue stream,” he says.

“In my view, a self-storage operator’s pricing strategy needs to consider three key factors: the cost of goods sold, their value proposition, and their customers’ alternatives,” Schwartz says. “There’s no one-size-fits-all approach to pricing strategies, but the more a customer relies on and trusts their self-storage facility, the more likely they’re to trust the products being sold.”

Moreover, tenants might be willing to pay a higher price for the convenience of purchasing these items in the self-storage facility. “When customers trust a business and already have a relationship with it, they’re more likely to pay for the added convenience of getting everything they need in one place,” adds Schwartz. “This is especially true for self-storage facilities where customers can easily pick up moving and storage supplies while renting their units. It saves them time and effort, making the overall experience smoother and more efficient.”

The placement of retail products within the facility is another crucial factor that can influence sales. While some businesses choose to display items in the office, others dedicate a separate showroom for these products. Regardless of the approach, it’s essential that the items are displayed and easily visible to tenants.

“If the facility offers a full showroom with the right product mix for the customer’s needs, why would they go elsewhere for their moving and storage supplies? The right price for a product should reflect all these considerations,” Schwartz says. “When customers see the range of supplies on offer, they’re more likely to make a purchase on the spot, especially if it simplifies their moving process.”

“Utilizing our boxes, which are a little more sturdy than the average box, can help maximize storage space by being able to stack boxes higher,” he says. This attention to detail demonstrates the care self-storage facilities have for their tenants, which can enhance the overall customer experience. “[Selling retail products] allows us to be a one-stop shop and prevent customers from visiting potential competition to purchase these products.”

In addition, selling retail products to the general public can help build connections with potential self-storage renters who purchase packing supplies but have yet to rent a storage unit. “The more you can offer the prospective customer, the more successful you can be in converting them into a customer who rents a storage unit with you,” Cobb says.

ow many ads have you seen today? You’ve likely encountered more than you can remember. Social media, emails, texts, pop-ups, billboards, and mailboxes are stuffed with junk that’s trying to get your attention. However, when there’s too much noise, people either ignore the message or throw it in the trash.

But once in a while a company gets creative, cuts through the clutter, and makes people laugh. Honestly, that’s the best way to get any conversation going. If you live in New York City, you’ve likely chuckled when looking at Manhattan Mini Storage’s marketing materials. With locations in Manhattan, Brooklyn, Queens, and New Jersey, they own a majority of the market share in the area; and thanks to their ads’ memorable humor, they likely also own your attention.

Sometimes inspiration comes from personal experiences; other times, TV shows inspire ideas. “For one of our campaigns, we decided to list all the ways having a storage unit is better than having a roommate, especially in New York City, where you can meet some interesting characters,” says Little. “Some of the ideas came from the Netflix series ‘The Worst Roommate Ever.’” With episode titles like “My BFF Tried to Kill Me,” “Housemate from Hell,” and “Burning Down the House,” no matter how you look at it, it makes the prospect of renting storage a lot more appealing than renting a larger apartment with someone else.

“We saw what a nightmare it is to find a roommate in NY who isn’t weird,” says Little. “We then played on the theme, well, a storage unit wouldn’t do that. We’re better partners than the vast majority of other humans.”

Other times they explore ideas that may not seem that exciting at first but end up being well received by their audience. “The most unexpected lesson I’ve learned with a brand that embraces humor is that you can never predict what the next viral billboard will be,” says Lydia Bryda, Manhattan Mini Storage’s marketing manager. “Naturally, we have expectations about which content we think will perform best, but sometimes the most underrated ideas that are tossed around in our meetings end up becoming fan favorites. It just goes to show that a successful creative process in marketing cannot exist in a bubble. Teamwork, collaboration, and diverse input are truly essential.”

Something that has definitely been instrumental in this type of marketing is the fact that they’re located in New York City. “Our strong New York presence enables us to tailor our brand voice specifically to the city’s unique energy and culture,” she says. “It allows us to take bold risks, and that generally yields bigger rewards.”

Since most New Yorkers need the extra storage space, Manhattan Mini Storage uses humor as a powerful connector. “Humor is not a new way of communicating,” says Little, “but it cuts through the noise and helps build memorable and authentic relationships.”

They don’t just use humor in their marketing copy. In the spring of 2024, they turned some of their storage units into mini comedy clubs. “I reached out to Brand Up Comedy via LinkedIn, telling them that we’d love to work with them,” Little says. “Thankfully, they replied and pitched the mini comedy club idea to us. We thought it was awkward and hilarious—very New York in that it was so completely unexpected, but actual New Yorkers showed up to do it. And the best part of having the world’s smallest stage is that it sells out fast.”

They got inspiration to decorate the sets from 90s TV shows, with Seinfeld vibes and neon lights; this unorthodox idea has paid off. If you aren’t lucky enough to snag a seat in the audience, you could still live stream the shows on YouTube, TikTok, and Instagram. Some of the sets have gone viral, and it’s made it a lot easier for them to fill up their content calendar.

“We decided to make it cheeky because storage can run the country better,” says Little. “One of our internal graphic designers created the illustrations, and Cris Burnam, our CEO, was the editor-in-chief of that campaign. He’d look at the miniature Trump and say, ‘Make it more orange.’ It was a lot of fun to work on it.”

They didn’t just come up with witty copy to get people through their doors. They also partnered with nonprofit nonpartisan organization Rock the Vote to get people registered to vote. To those from the MTV generation, the name likely rings a bell; the organization was created in response to censorship in hip-hop and rap, and it was the music videos channel that helped them spread the word about the importance of making your voice heard.

All joking aside, they also thought they could amplify the reach of the campaign and increase voter registration through that partnership. “It really was such a great experience,” says Little. “We had people in the city and from outside New York who checked their voter registration status, and many registered to vote. It was a win all around.” So far, this has been one of her favorite campaigns because it paired humor with a purpose and it sparked meaningful conversations, regardless of whether people loved or hated the billboards.

Little summarized it perfectly. “There was an old billboard ad before we took over. It said something along the lines of ‘You could afford a larger home in the suburbs, but then you’d be in the suburbs.’” Truer words have never been spoken.

he self-storage industry has weathered many challenges in recent months. We’ve seen rental rates soften, occupancy levels fluctuate, and investor sentiment cool as interest rates climbed. Many operators have been forced to reassess their growth strategies and tighten their belts. But amidst these headwinds, our recent “2025 Self-Storage Industry Outlook” report has unveiled a silver lining that could be a possible turning point the self-storage market has been waiting for.

The data is striking: Thirty-seven percent of Americans are considering or planning a move within the next year—a significant jump from the 25 percent who said the same just last March. For an industry that’s been grappling with rate pressure and slowing lease-up velocities, this surge in potential demand couldn’t come at a better time. It offers a real opportunity to offset the recent dips in rental rates and reignite the growth trajectory we’ve been accustomed to.

The market is as competitive as it’s ever been, and consumers are more price-sensitive than ever. The question isn’t whether to act, but how quickly and decisively can we position ourselves to capitalize on this shift while navigating the pricing challenges we face?

Here we explore three interconnected strategies that, when implemented together, have the possibility to transform this relocation wave into a flood of wins for their business.

For Operators In The South
Prepare for increased demand by optimizing your unit mix. With 34 percent of movers planning to relocate within the same state, consider offering a range of unit sizes to accommodate both local and long-distance moves. Focus on short-term rental options, as 79 percent of respondents say they need storage for six months or less.

For Those In The Northeast
Despite recent population declines, our data suggests a potential rebound. Consider partnerships with real estate agencies or relocation services to capture the influx of new residents. Highlight the convenience and flexibility of your storage solutions for those navigating the often-cramped urban environments of Northeastern cities.

For All Regions
Operators in all regions should pay attention to the 25 to 44 age group; they are most likely to move. Tailor your marketing messages to address their primary motivators, which include cost of living, better job opportunities, and housing changes.

Consider implementing a dynamic pricing model that allows for flexibility based on demand, unit size, and length of stay. For example, offer competitive rates for the most popular unit sizes during peak moving seasons while providing slight discounts for less in-demand units or longer-term commitments.

Leverage promotional offers that resonate with price-conscious customers. Our data shows that “First Month Free” and “75 Percent Off First Two Months” are particularly effective. These promotions can attract new customers during their move without compromising long-term revenue.

Remember that while price is crucial, value-added services can justify premium rates. Our previous Tenant Insights report in March 2024 found that a quarter of tenants would pay more for 24/7 access and climate-controlled units. Offering these premium features can help maintain profitability even in a price-sensitive market.

These aren’t just storage customers—they’re individuals and families in flux. They’re dealing with job changes, family dynamics, and the emotional weight of uprooting their lives. Many are millennials and younger Gen Xers who are tech-savvy but also craving human connection during a stressful time. They value efficiency but not at the expense of empathy and understanding.

To truly serve this demographic, we need to think beyond just providing space. Consider implementing a holistic “relocation concierge” approach. This could start with a user-friendly online reservation system, but it shouldn’t end there. Offer a personalized moving checklist, connect them with vetted local services (movers, utility setup, etc.), and provide area guides for those new to your city.

Technology should enhance—not replace—human interaction. Train your staff to be empathetic listeners and problem-solvers. They should be equipped to offer advice on everything from packing techniques to navigating local school districts. This blend of high-tech convenience and high-touch service can transform your facility from being a waypoint in their journey to a valued partner in their transition.

The goal isn’t just to capture short-term demand but to convert these relocating customers into long-term tenants. By providing value, flexibility, and outstanding service during a stressful time in their lives, you can build relationships that last well beyond the initial move.

tarting any career in any industry can feel daunting, especially when you don’t know anyone. It can feel even more intimidating if you’re one of the many people who experiences imposter syndrome. Everywhere you look, there are people who know more than you do, or you think they know more than you do. While there are certainly subject matter experts who’ve been around the rodeo a couple of times and could teach the younger generations how everything is done, there are also plenty of individuals who feel just as out of sorts as you.

The good news is that every single one of the industry legends you’ve met was once in your shoes. Unlike the early days of the self-storage industry, where a lot was learned by trial and error, the Self-Storage Association’s Young Leaders Group (YLG) provides a huge safety net, a long list of resources, and shared wisdom that you can use to your advantage. It’s also a place to make friends. No matter how much of an introvert you may be, it’s always good to have a person or two in your corner whom you can text with quick questions. So, let’s talk about YLG and why, if you’re 40 or under, you should run to their next event to join the group.

There’s definitely safety in numbers, and seeing familiar faces is the best way to feel welcome at any event. But in addition to making new friends, the group provides valuable tools to help young professionals develop within their self-storage career.

“In addition to networking, we also focus on leadership and skill development,” says Capranos. “We do social events, but we also organize educational workshops where we bring speakers and sometimes a panel of experts to talk about a specific subject members may be interested in. We also sometimes invite former YLG members who’ve become successful in their careers to talk about how they got to where they are and to share a lot of their knowledge.”

Some of the most recent workshops included a speaker who taught members about executive communications: how to do it effectively, how to have a good presence when doing so, and how to stand out in a virtual setting. “This is something that has become increasingly more popular—hosting video calls and virtual events, where it’s easy to get lost in the sea of people who are logging in,” says Capranos. “So, it was a very interesting workshop to help us learn how to navigate them and how to get noticed, in a good way.”

That specific workshop took place at the SSA’s 2024 fall conference and trade show at the MGM Grand in Las Vegas, where certainly a good time was had by all. Their next big event will be at the spring conference in Orlando—another fun destination to meet new people and learn from the best in the industry.

While the fee waiver is temporary, it shows that there’s no better time than the present to jump on this opportunity and be on your way to growing your network.

“It was an excellent networking opportunity,” says Capranos, “and I met a lot of folks who were involved, including Travis Morrow, who was one of the founding members of YLG, and who is now president of National Self-Storage and an executive at MSM.”

There are also committees within the leadership group. The membership committee focuses on recruiting efforts, the marketing committee runs the social media campaigns, and the extracurriculars and programming committee focuses on the events hosted by YLG at the SSA’s fall and spring conferences. If you eventually want to explore getting involved with their leadership team, you can focus on the type of planning and organizing you enjoy the most.

“The last thing we want to do is become cumbersome from a scheduling perspective,” says Capranos, “so we decided to combine some of our events and see how it goes.” Not only do you get a network of like-minded professionals, mentors, and friends, you also get a group of people who want to make things as easy as possible for you. It’s a win-win no matter how you look at it.

If you’ve registered with the Self Storage Association and you’re under 40, you’ll also receive their marketing emails. While these are great ways to find out what they have in the pipeline, it’s up to you to be proactive and take the next steps.

“There have been people who have moved on to do something else in their professional life, and there have been people who have become business partners, or with whom we share vendors, and even people I’ve hired as my business grows,” he says. “It’s been very rewarding, and I’m definitely looking forward to seeing what else happens in the future.” Capranos is especially excited about what happens next, considering the exponential growth YLG has experienced in the three years he’s been a member.

He also highlights that getting involved in as many events as possible has been an overall rewarding experience. “A lot of my friends and connections in the industry are people I’ve met throughout my years with YLG,” says Capranos. “You first meet them as being part of this peer group, but now I look at the folks I reach out to on a daily basis for mentorship, or to share ideas, or to just ask them how their businesses are doing, etc. … And a lot of that has come through these connections I’ve made at YLG. It’s led to so many other things, and it’s been really rewarding to look back on.”

It’s even more gratifying when considering that most (if not all) people reading this article probably didn’t have working in self-storage on their bingo card in the first place. “I never thought I was going to work in self-storage,” says Capranos. “I never went to school thinking I’d rent garage spaces to people, and now I can’t imagine doing anything else. We’re this asset class that isn’t necessarily thought of when starting a career, but the size of our industry is huge—11 percent of Americans own a storage unit. People are becoming more aware of the industry as it matures and it becomes more institutionalized.” As the industry keeps growing, more and more opportunities will keep popping up for young professionals.

As he explains, ending up in self-storage was a happy accident, which is the case with most people who find their way into it. Luckily, the Young Leaders Group is ready to welcome you with arms wide open and an arsenal of goods to aid you in your road to success.

Capranos also points out that the benefits and fulfillment that comes from being a member is something that extends far beyond the early years of someone’s career. As time goes by, he admits that it feels good to look back and reflect on how far he and his colleagues have come, as well as all the relationships built along the way. At the end of the day, if there’s something that’s a common denominator in the self-storage industry, it’s that it doesn’t matter who you ask, everyone’s favorite part of this career path is its people. “Three years ago, I’d walk into these conferences for the first time, and I wouldn’t know anyone,” recalls Capranos. “Now, I can’t go to any of these events without knowing so many people, and that’s a really nice feeling.”

Maggie Bode agrees. “YLG has been an invaluable platform for fostering community and building connections in an industry that thrives on relationships,” she says. “Through my involvement with YLG, I’ve not only expanded my company’s business opportunities and strengthened my professional network but have also developed genuine friendships where we don’t even talk about storage (most of the time at least).”

Like the adage says, “It take a village to get anything done well,” and joining YLG certainly gives you one.

very wise self-storage expert once said that self-storage is not a sexy industry. “It’s a lot of garages. The shiny hotels, offices, and retail centers tend to look a lot nicer, but self-storage is sexy if you like making money.” Spoiler alert: This golden nugget was mentioned by R. Christian “Chris” Sonne, specialty practice co-leader at Newmark, a consulting firm that assists investors in every stage of self-storage development. But we’ll get back to his insights later. The reason this article opens with his statement is that it’s true: Investing in self-storage can be a goldmine, but as with everything else that has to do with real estate, location is key.

So what are the hottest markets right now? And what data should you be looking into to get the highest ROI?

For example, what’s currently affecting the environment the most is the housing market. “This is the most important component for today’s fluctuations within demand,” says Aghadjanians.

Cory Sylvester, principal at DXD Capital, agrees. “Demand across the country right now is averaging below trend lines because you have such a slow down in the housing market. It’s essentially frozen at the moment,” he says. “That lower level of moving activity has definitely decreased the demand.”

This is a trend that’s affecting the entire country, regardless of whether it’s an urban area or a smaller town. “The more bullish times of the economy, you see that spread to more tertiary markets,” says Sylvester. “That’s a natural ebb and flow of the business and storage within the U.S. right now … I wouldn’t say there’s any one area that’s doing anything different from the rest of the country that would be notable.”

Even when things are going well in the economy, there are people who won’t invest in certain geographical locations due to local hurdles. “Chicago has an enormous amount of unfunded pension liabilities,” Sylvester says. “At this point, this is resolved through increased taxation, and taxation comes in the form of property taxes, which is a direct hit in the storage model. The uncertainty there impacts cap rates and the willingness to invest in certain areas.”

That said, when investors are considering sites that are attractive to them, Sylvester cautions about what they should consider. “A pivotal factor when selecting a site, you’ll want to look at the relative health of the market,” he says. “Rates are critically important, since they are indicative of the supply and demand when looking at an area.”

Sylvester then advises to look at the location’s density. “We generally want to see sites with a certain density level,” he adds, “although we’d still build in an area with a below threshold level if the migration patterns in that area are seasonal. That’s an asterisk to that methodology.”

Finally, he takes a look at the pipeline. “We pay close attention to gauge if there are other projects that have been recently delivered or are going to be delivered in the future,” Sylvester says. This includes paying attention to zoning and what can be built around the area. “That sets the stage for whether there’s going to be a lot of development in that location.”

Aghadjanians also offers words of caution when looking at different sources of data. “Some reports may show a specific city as a top market, but you have to look at everything within context to get the full picture,” he says. “For example, when were the most recent facilities completed? This may cause rental rates to drop as a larger percentage of the market share is competing to fill up hundreds, or even thousands of new units.”

Aghadjanians advises to look for actual self-storage revenue performance instead of just theorizing based on demographics. “What’s rent growth looking like? How are the facilities performing?”

“I would say I like Greensboro, Buffalo/Niagara Falls, Providence, and El Paso,” says Sonne. “You want to look at the cost of occupancy. What’s the average annual rent per unit? Take the total rent annually and divide it by all the units. Then you’ll compare that average to the average household income in that area. Anything under two and a half percent suggests there’s room for growth. When you look at any of the cities I mentioned, the cost per occupancy is around 1.2 percent. Buffalo, for example, is four square feet per person, which is below the national average, so the cost of occupancy is less than 1 percent. A lot of people are moving there because of its lower cost of living and it’s a nice community. It’s an interesting market because of the affordability level.”

Sonne owns self-storage property in El Paso that has exceled due to an abundance of land, lower costs to build, and availability of labor. “People wouldn’t ordinarily think it’s a big market, but it’s done well,” he says. “There are some markets that tend to be off the radar. Certainly not in the top 50 metropolitan statistical areas, but the supply and demand metrics look good and costs are low.”

Sonne emphasizes that regardless of what’s happening in a large city or MSA, what really matters is the trade area—the three mile radius around it. He also advises to do boots on the ground, old school work when conducting research. “I encourage people to rent a facility at the nearest competitor and see what kind of rent increases you get,” says Sonne. “See how full it is. Is there a lot of activity? There are so many articles that are published, and so much data, but this kind of research will give you practical information you can rely on.”

This is especially useful when there’s such a wide range of opinions on any given subject. “You can ask different CEOs which markets they like the most, and they all have different opinions,” Sonne adds. “There’s no consensus among them. And diversity of opinion is good in any industry, but it also shows the importance of going out there and checking things out for yourself.”

In a nutshell, context is everything. And in a world where we rely so heavily on technology, it’s good to use it as a crucial piece of the puzzle, but it’s still not a substitute for good old fashioned leg work. “Storage is a great investment. It’s recession resistant, resilient, and not subject to wide swings,” says Sonne. “It’s a very efficient business model, and there’s a lot of capital waiting on the sidelines to get into the industry.”

f you are looking to join the industry or extend your self-storage business portfolio by building or renovating an existing building, you will probably need to create a development team to make sure your project is a success.

Nowadays, a development team goes beyond just the legal and construction aspects. The industry has evolved because of increasingly demanding clients who expect efficient, modern, and secure space and competitors trying to make their units superior to win them over.

For Sarah Beth Johnson, vice president of sales and development at Universal Storage Group (USG), the first step when creating a development team is to consult with self-storage management professionals. She offers these insightful suggestions:

• “Share your vision for the facility with them, as they can provide invaluable insights into whether your concept aligns with current market needs.”
• Find a management company that specializes in development and operations. “This is a significant advantage, as they can offer guidance on realistic construction costs based on their current projects and help set expectations for timelines and budgets.”
• Following consultation with a management company, met with lenders to explore financing options and understand your project’s financial requirements.
• “After that, interview brokers to find one who aligns with your goals and can help you secure the ideal site for your facility. By following this order, you build a strong foundation for your project with industry expertise, financial clarity, and a strategic location.”

Johnson adds, “My advice to someone assembling a development team for the first time is simple: education, education, education. The more you learn about the self-storage industry and the development process, the better prepared you’ll be to make informed decisions. Start by immersing yourself in the industry. Attend state association meetings and national trade shows where you can connect with experienced professionals, learn about the latest trends, and gain insights into what makes a facility successful. These events are invaluable opportunities to network with operators, vendors, and consultants who can offer advice and guidance. Take the time to speak with other self-storage owners who have undergone the development process. Their firsthand experience can provide invaluable lessons about what works and, more importantly, what doesn’t. Additionally, subscribe to industry publications and read up on everything from market trends to operational best practices. Staying informed will help you ask the right questions and evaluate the advice you receive.”

This consultant should also conduct market research and feasibility analysis, which Johnson believes to be invaluable when assembling your development team. “It provides a solid foundation for decision-making. It helps you identify the right professionals, such as architects, engineers, and contractors, based on the specific requirements of your site and project,” she says. “It also gives you clear data to present to lenders and investors, ensuring everyone involved understands the financial potential and risks. By conducting an in-depth feasibility study, you set your project up for success, ensuring the team you assemble aligns with the market, your goals, and the unique challenges of your site.”

Civil Engineer
Civil engineers predominantly work with a focus on the infrastructure of the building. Whether they are working on ground-up construction or the renovation of a new building, these professionals are responsible for doing the literal groundwork, such as draining and soil stabilization; planning the essential utilities like sewage, electrical, and water lines; and creating access points from the road to the facility’s parking lot, all while making sure the project adheres to local regulations and zoning laws.

David Meinecke, vice president of Jordan Architects, stresses the importance of having a local civil engineer with self-storage knowledge in the development team. “Finding a civil engineer with self-storage experience is obviously preferred and can help save costs down the road with grading, drainage, etc.,” he says. “The civil engineers we work with give valued input at the forefront of the development in order to avoid potential pitfalls down the road. Civil engineers should always be local to the site location and have familiarity in dealing with the jurisdiction in question.”

Structural Engineer
The structural engineers mostly focus on the building itself by making sure the construction is stable, strong, and safe. These professionals are responsible for creating the design for the foundation of the building and all other structural elements. They are also responsible for choosing the right material to be used in different parts of the construction, making sure the construction complies with local building codes and safety regulations, and making sure the building will be able to hold the weight of the live load (ever-changing weights such as foot traffic, equipment, furniture, and customers belongings), dead load (the weight of the structure of the building and any fixed equipment), and environmental load (the weight of external forces such as wind, snow, earthquakes, and more).

When it comes to existing buildings, they work to assess and strengthen their structural components. “We typically use one of two structural engineers that do projects nationwide. These engineers have a wealth of storage experience and design projects in a way that saves the client money in construction,” says Meinecke. “Using an inexperienced structural engineer can lead to unnecessary costs during the construction phase, typically due to over-engineering the project.”

Architect
The architect is responsible for creating a conceptual design according to the client’s vision while making it functional. A few of their tasks include making sure both staff and customers have easy access to units; planning unit size mix and internal layout; choosing customer-facing areas from reception to loading zones; creating an appealing exterior that features the company’s branding; ensuring the design adheres to local building codes, fire safety requirements, zoning regulations, and accessibility standards; designing the overall aesthetic side of the building, making sure it is also functional and within budget; and more.

“Architects typically play the quarterback role in the project, and it is therefore vital to have one with experience in self-storage. We have seen many drawings over the years from inexperienced self-storage architects, and the mistakes made impact the bottom line of the project,” says Meinecke. “While not terribly complex, self-storage is a specialty product type that requires experience in order to maximize profits and operational functionality.”

These professionals are also going to be handling any unexpected challenges along the way to ensure project success. “The right GC will have industry contacts that can help expedite the construction timeline,” adds Meinecke. “Experience with self-storage is a huge consideration when selecting a GC. Developers should thoroughly vet GCs through interviews and client testimonials.”

Metal Components Suppliers
From commercial roll-up doors, panels, and relocatable storage units to hallway systems, self-storage facilities use many metal components in their layout and structure. The suppliers usually work alongside architects to figure out the best unit mix to maximize earnings and tend to the local market needs while choosing tailored products and components to meet specific project requirements.

Security Systems Providers
A big part of the self-storage industry is ensuring your clients’ belongings are safe. When assembling a development team, working alongside a reliable security system provider will ensure your facility is safe. These professionals are responsible for installing access controls for the entrances of the building and the units, CCTV cameras, motion detectors, and everything else regarding the security infrastructure of your facility.

Software Provider
Software providers are responsible for making everyday operations more efficient by offering software solutions that streamline unit rentals, payments, inventory tracking, and more, as well as integrating security systems like alarm monitoring, access control, and CCTVs. Products like customer relationship management can also improve overall customer experience by managing customer inquiries, tracking reservations, conducting customer satisfaction surveys, and running email campaigns.

xtra Space Storage’s journey into solar energy began nearly 15 years ago, driven by a commitment to sustainability and operational efficiency. “Our goal is to invest in solar where it makes sense,” says McKall Morris, senior manager of corporate communications and sustainability for the REIT. “Each project is evaluated for return on investment and feasibility.” The company has since produced an impressive amount of solar power in 2023 alone, emphasizing its dedication to renewable energy.

Additionally, 33 percent of its REIT-owned properties feature solar installations, a testament to the program’s growth and impact. Each year, Extra Space invests $20 to $30 million in solar projects, prioritizing locations with favorable tax incentives, high energy costs, and ample sunlight. “The nice thing is every year it seems like it makes more and more sense for more properties,” Morris says. This continued commitment not only aligns with their broader strategy of reducing greenhouse gas (GHG) emissions and energy consumption, but it also helps create an innovative opportunity for more storage facilities to follow suit.

Structural and locational limitations are significant factors, as are the evolving technologies and regulations that govern the energy sector. Weather conditions such as thick cloud coverage or areas at high risk for extreme storms are also components that need to be considered.

Technological advancements present both opportunities and challenges too. For example, the transition away from 3G technology for the facility required a complete overhaul of their reporting systems. “The technology changes quickly,” Morris says. “We had to adapt our reporting systems when older technologies became obsolete. These adjustments are necessary to stay ahead.”

A standout achievement is Extra Space’s ability to maintain 79 percent less carbon emissions than the real estate sector average. According to McKinsey & Company, the real estate industry is responsible for 40 percent of global emissions. This significant gap illustrates the company’s investment into finding eco-friendly solutions in an industry not traditionally known for sustainability.

The company’s leadership in sustainability and innovation has set industry standards. Recognized with the Nareit “Communications and Reporting Excellence” (CARE) award in 2023, Extra Space continues to excel in reporting and stakeholder communication.

The company’s dedication to workplace equity is another highlight. In 2023, Extra Space achieved 100 percent pay equity, ensuring that women and BIPOC employees receive equal pay for equal work. Recognized by Newsweek as one of “America’s Best Companies for Diversity” and by the Utah Governor’s Office as a company championing women, Extra Space continues to set a high bar for inclusive business practices.

With ongoing investments and a proven track record, Extra Space is poised to expand its renewable energy initiatives while maintaining its commitment to sustainability, community engagement, and customer satisfaction. “Our program has always been about balancing financial returns with doing what’s right,” Morris says, underscoring the company’s mission to lead the industry toward a greener future.

Extra Space also sees opportunities to deepen its engagement with communities and employees. By expanding programs like “There’s Space for Everyone” and continuing its charitable efforts, the company aims to strengthen its social impact while advancing its environmental goals. With a proven track record of innovation and a clear vision for the future, Extra Space Storage is poised to remain a leader in sustainability, community engagement, and customer satisfaction for years down the line.

re you operating a self-storage facility or business as a “trust?” Today, it’s not only the ultra-wealthy who are reaping the many benefits of operating their facilities and businesses as a trust. In fact, there are several reasons for the growing interest in creating trusts for businesses.

Protecting assets, succession, and estate planning are often cited as reasons for creating a trust. Of course, there is also a downside, since creating a trust is both expensive and complex.

In addition to the initial start-up expenses, business trusts require a cost to maintain, including paying a third-party manager. And, not surprisingly, there are ongoing legal costs as well.

Added to the extremely important initial legal advice and assistance often necessary when establishing a business trust, legal fees are extremely important to ensure the trust is in compliance with both federal and state tax laws. However, complexities and costs aside, there are many reasons why a self-storage professional might benefit from a trust.

The trustee can be a company or an individual, including the business’ owner. The business owner can be the sole trustee of the trust that holds the business, as well as being a beneficiary, so long as he or she is not the sole beneficiary.

• Grantor Trusts – Grantor trusts are generally self-contained and consist of a grantor, a trustee, and a beneficiary. The grantor pays taxes on the income generated by the trust and has complete control over it, including control over business distributions to the beneficiaries.
• Simple Trusts – In order for a trust to be included in this category, its status must be approved by the IRS. With a simple trust, the trustee must distribute business profits directly to the beneficiaries and is prohibited from other actions, including touching any principal assets.
• Complex Trusts – A complex trust is, in many ways, the opposite of a simple trust, although it isn’t managed by the trust’s beneficiaries. Profits from the business and other funds may be distributed only in part to beneficiaries and may even be contributed to other organizations, such as charities. In order to maintain its status as a complex trust, the trust must have at least some form of income.

Just a note: Trust beneficiaries are required to pay tax on income received from a trust. A simple trust can deduct certain expenses and must file a tax return. A simple trust that does not meet the IRS’s definition may be classified as a complex trust.

There are a number of benefits for creating a family trust, including ensuring family members receive their share of the business and avoiding public disclosure of a trust’s assets. A family trust is essential for estate planning and ideal for self-storage professionals who want to continue the legacy of their business or hand over management to a designated person.

While there are benefits to creating a trust, not every family needs a family trust. In fact, if the operator has no heir to run the business, ownership to the trust can be passed on, and a CEO appointed to ensure regular income disbursements continue.

The self-storage operation may be better suited to operating as a limited liability company (LLC), a partnership, or some other type of entity. Fortunately, there are a number of other options.

• LPs – Using a limited partnership (LP) or a limited liability company (LLC), parents can transfer shares of their LP or LLC without giving up control of the business. Parental control of the business is ensured in the LP because limited partnership interests are transferred, while the parents retain the general partnership interest. Limited partners cannot, of course, participate in the management of the business.
• LLC – An LLC can be used to accomplish the same purpose, with all of the owners having limited liability for the operation’s debts. An LLC can be structured as a “member-managed” entity, where all owners participate in management, or it can be formed as a “manager-managed” entity, where the owners who are also the managers control the business.
• FLLC – A Family Limited Liability Company (FLLC) must meet the IRS’s requirements or risk being labeled as something else. The owners must be careful to put only business assets into their FLLC; limited partners (typically the children of the owners) may be exposed to future capital gains liability.

The federal tax rate for a trust is 37 percent on income over $15,200 (2024 income). This high tax rate incentivizes trustees to distribute income to the trust’s beneficiaries, who may be in a lower tax bracket.

Instead of trusts paying tax on their income, it is the beneficiaries who usually pay tax on any distribution they receive. However, the beneficiaries do not pay tax on distributions received from a trust’s principal, which is the initial amount of money transferred to the trust.

Although trusts are ordinarily associated with succession or estate planning, they can, in some situations, be an invaluable tool for the owners of a self-storage facility or business. A business owner can hold the business in a trust instead of using another business entity such as an LLC, partnership, or corporation.

Trusts offer several potential benefits, and potential pitfalls, compared to more traditional business structures. A trust can, for example, protect the business from creditors and lawsuits. A trust can also be used to transfer business assets to the owner’s heirs without going through probate.

Of course, while there are benefits to establishing a trust, there is the downside to consider. Trusts are, as mentioned, expensive to set up and complex to maintain. They also require the trustee to undertake annual administrative tasks, and, once established, a trust can be difficult to dissolve or change.

It can’t be emphasized enough that a trust is not for every business nor every self-storage facility owner. However, scheduled and proposed changes to the tax rules may prompt many to investigate using a trust.

Under the soon-to-expire Tax cuts and Jobs Act (TCJA), the federal estate tax, often labeled as the “death tax,” is only applied to estates passed on to heirs valued over $13.61 million. The recently proposed budget would reduce the threshold at which the death tax kicks in to approximately $5.49 million. Reforms contained in a proposed congressional bill would reduce the threshold to $3.5 million.

Obviously, no operator should assume that a trust is the answer for their self-storage business. Needless to say, the advice of an estate planning professional, as well as the self-storage operation’s legal, tax, and accounting professionals, is extremely important.

nce upon a time, the self-storage industry was … let’s just say, “technologically challenged.” And it worked. Besides offering storage space, not much was needed to be successful other than fences, padlocks, and mom and pop, who often lived on the site to oversee things. But the industry has come a long way, and today self-storage has begun implementing new property technology (“proptech”) that changes the way facilities are developed, marketed, managed, and occupied. This proptech boom, which Forbes reports is being driven by the increasing adoption of the Internet of Things (IoT), machine learning (ML), artificial intelligence (AI), and virtual reality (VR), is expected to expand at a compound annual growth rate of nearly 16 percent through 2030.

Despite this, when talking with owner-operators at various events, I’ve found that many don’t budget for technology. They set aside money for CapEx of course, using it for facility repair and maintenance (roofing, painting, asphalt, and so on). But they don’t treat tech in a similar fashion; there is no “TechEx,” so to speak, even though many of these expenses could fall into the bucket of a long-term investment as well.

Lance Watkins, CEO of self-storage technology platform Tenant, Inc., has also noticed the lack of technology budgeting. “The most successful self-storage operators understand that technology is not an expense, but an investment in the future of their business,” he says. “By allocating CapEx funds for proptech, they’re not just buying gadgets; they’re building a foundation for long-term growth and profitability.”

According to Deloitte’s Commercial Real Estate Outlook, more than 60 percent of business owners admit their technology infrastructure still relies on legacy systems, but only half are making efforts to modernize. To that, I’d say that even squirreling away 20 cents per square foot per year for TechEx could help owners plan to innovate in the future with hardware and software upgrades. This is especially important for smaller operators that need to be able to compete with the often more tech-savvy REITs.

“Investments in tech, anything from upgrading to smart locks and access control systems to implementing revenue management solutions and centralizing business data will pay dividends in the form of increased operational efficiency, improved customer satisfaction, and a stronger competitive advantage,” adds Watkins.

He gets no argument from me. But, because technology within self-storage can come in many forms, I thought it was important to reach out to a variety of experts within different segments of the industry to collect their thoughts on budgeting for what I’m calling TechEx.

Planning for a contactless future is one area that numerous proptech professionals believe could be locked into a CapEx budget. Rodolfo Ramirez, co-founder and COO of swivl AI, a platform for self-storage companies that employs automation and AI-powered Q&A bots, is in full support of this notion.

“When it comes to CapEx investments that are related specifically to technology, first and foremost, it’s pretty important to plan for flexibility,” says Ramirez. He brings up a recent podcast in which he interviewed Rick Beal and Magen Smith of Atomic Storage. “They discussed flexibility as a key point in their strategy to futureproof facilities by ensuring all sites, whether manned or unmanned, are equipped to transition to remote or hybrid management models if needed.”

Ramirez recounts how Beal shared that with every store their team opens, even if it’s a manned site that they set it up so it can be remotely run someday. He believes it is this sort of foresight that saves them from having to make significant investments later when a need may arise.

“What I think is key with this approach is that it ensures the minimization of large retrofit expenses while ensuring tech CapEx aligns with long-term operational goals,” says Ramirez. “Another important aspect to underscore here is that simplifying transitions and enabling scalability through initial investments reduces the financial and logistical hurdles that may arise years down the road.”

Steven Scott, CEO of Access Storage in Canada, demonstrates this notion perfectly. When he spoke with MSM in late 2024, he mentioned that the company had been testing the water with remote management for a while. Then, when COVID shut the world down, they were already prepared. “We pre-coded about 20 of our stores to be virtual pre-pandemic. No office, no one on site. It worked seamlessly.”

Had Scott and his team not budgeted and planned for the need to go remote, the pandemic could have had much more serious consequences for their business. Today, budgeting for TechEx continues to pay off, with Scott stating that about 50 stores now follow this model. It has even helped when there is a labor shortage. “If we had to try to staff those 50 stores in this employment environment, it’d be a big challenge.”

“Most owner-operators should be planning ahead for tech CapEx expenditures,” states Terry Bagley, president of industry and partner relationships with Janus International, the leading manufacturer and supplier of self-storage building solutions. “Technology is iterative, so you always need to plan to make additional investments in the future. This is especially prudent for anything that’s not a true SaaS model. You’re going to have hardware, installs, and so on. Right now, there’s a lot of new IoT and AI things coming down the pike, and everyone needs to be thinking about that and planning for that.”

Robert Chiti, CEO of OpenTech Alliance, which offers various tech solutions, including access control, locks, full-service kiosks, and security monitoring, has a similar mindset. “You budget for door replacement, painting, landscaping … Technology should be no different. In fact, technology can change or become dated much faster than any of those things!”

Chiti says that while you may be able to squeeze another season out of your current paint job, waiting that long for something tech-related can really set the business back.

“People didn’t used to think much about their lighting,” he says. “Now, operators are changing it out and adding sensors to be more energy efficient and save money. There’s also access control. You used to wait until keypads broke to change them out. Now, you change them out to keep up with what’s new or to install Bluetooth compatible ones that don’t even require a tenant to pull out their phone. Now, you’re providing a better experience, and people will pay more for that.”

To bring home his point, Chiti holds up his phone. “When was the last time you waited until your phone stopped working to upgrade it?” It’s a point well taken.

“It’s just as important to budget for your digital presence and online store as it is for your brick-and-mortar locations,” she says. “You need to be open 24/7, and you need to be where the younger generation is looking.”

One upgrade numerous operators have planned and budgeted for is The Storage Group’s ClickandStor™ Online Rental Suite, an extensive platform that optimizes revenue, enhances rental security, and increases a facility’s visibility. “ClickandStor integrates with most PMS systems,” says Dotson. “Often, when someone uses SiteLink, for example, at the point of transaction the look and feel of their website changes. ClicknStor can use SiteLink, but it maintains the look of your site. This creates confidence and builds trust with customers. And it’s something you’ll want to budget for.”

She’s also seen far too many websites that were perhaps created by a family member or built with a free tool. While this may have been acceptable years ago, it’s no longer going to fly. “Your website needs to be up to date, with the ability to reserve or rent a unit and take a transaction on the spot. And please, no stock photos. You need to have good photography.”

Josh Huff, co-owner of Lighthouse Storage Solutions, would certainly agree, as he also stresses the importance of having an updated website with current photography and even drone footage (he is an FAA-licensed drone pilot, after all).

“I’ve known owners to spend a lot of money on physical site improvements, but then not spend anything on photography and a website update that would show it off,” he says. “They budget for repair and maintenance because it’s tangible, whereas the ROI from highlighting the improvements on the website may not be immediately felt. But if you’re not showing it off, some customers will never know about the new work, or understand why perhaps their rates went up as a result of that.”

Huff also explains how owners can get more bang for their buck by using photography and aerial footage to not just promote the facility but also look for issues with roofing, ways to improve layout, and so on. “You may even need to make an insurance claim at some point, and that footage can be used for that.” Talk about a win-win.

Sue Haviland, owner of Haviland Storage Solutions, says that many clients are initially skeptical of a technology budget. “Setting aside money for that is foreign for some of them; they may not even budget for new computers. So, we’ll often start small and add to [a tech budget] each year, but it’s always built in for the clients I manage.”

Money could be used for website updates, gate software upgrades, keypads, or any number of things. “For new clients, I bring them proposals with different levels of work,” says Haviland, “but most owners want to be hands-off, which can be best. There are less cooks in the kitchen, and we’re able to do what needs to be done.”

That doesn’t mean that every client is on board with the budget. “If an owner doesn’t want to do things to improve, physically or digitally, and the work environment and performance of the property is going to suffer because of it, it’s not a good fit and we will terminate that contract,” she says. “We have to be on the same page to have a relationship.”

Storage Authority, the only true self-storage franchise in the United States with more than 30 franchisees operating under it, helps owners find land, plan, design, and construct their facility, opening it under the Storage Authority brand name. Marc Goodin, principal at Storage Authority, makes sure franchisees are prepared to keep up with today’s technology.

“It can be hard to get self-storage owners to budget for any CapEx,” says Goodin. However, it’s not always that they don’t understand the benefit of it, rather, the franchisees are always so successful that the ability to pay for tech upgrades is never in question. “They’ll just pull the money out when they need it.”

This doesn’t mean they shouldn’t be prepared, however. “What I think is more important is that they budget their time,” he says. “They need to be reading vendor newsletters, listening to webinars, taking classes, attending self-storage events. This helps to stay knowledgeable about what’s out there and then determine what, when, and if a new technology install or upgrade would be right. When a gate is broken, we know it and we fix it. But we don’t always know when our tech isn’t working; we don’t know if our SEO is still performing, for example. So, we need to stay on top of that. But not every technology is going to be right for every franchisee, or maybe the tech is in its infancy, so it makes sense to wait a bit. Regardless, be aware of what’s out there.”

“It can be easier said than done,” says Ramirez, “but if you invest the time upfront to do your due diligence while selecting technology and prioritize technology that consistently works and is simple to implement and maintain, you’re on a good path. Remember that strategic CapEx for technology isn’t just about buying tools—it’s about creating infrastructure that supports operational efficiency, scales with growth, and ultimately delivers better ROI.”

Dr. Ahmet Kuyumcu, founder of revenue management technology company Prorize, sums things up well. “Our clients hire us because when you invest in revenue management technology, you increase leads and revenue and make better decisions. Sure, you could have saved money by not investing, but look at how much more you gain when you do. So, you should never think of technology as a cost but as an opportunity to make money. When you do that, you won’t mind budgeting for it.”

Here’s to building a relationship with your exes—both CapEx and TechEx!

he unfortunate reality is that most things are more expensive now—groceries, gas, insurance, and housing to name a few. As for that last one, it’s not only that the valuation of real estate itself has gone up, but so have the U.S. Treasury’s interest rates. While it has certainly made the cost of acquisitions and development more expensive, it’s not necessarily a dire landscape.

“This is probably the area in our sector that has been affected the most,” says Aaron Swerdlin, vice chairman at Newmark Group, Inc. “It’s really difficult to develop right now because you also have a street rate environment where all the large operators are capturing demand by using discounted pricing as a marketing tool, so it’s difficult for developers to pencil projects.”

While banks aren’t holding borrowers to a higher standard, Hill adds that higher interests may make it harder for some people to qualify for a loan if they are equity constrained. “One of the things banks look at is the Debt Service Coverage Ratio (DSCR)—how much cash flow is available to service the debt,” he says. “Lenders use metrics such as 1.30 times DSCR. Logically, if the debt service is higher, it becomes more difficult to meet the threshold.”

Neal Gussis, executive director of capital markets at SPMI Capital, mentions an additional way the higher rates have impacted construction financing. “Construction loans have the period of time when the property is being constructed, as well as the lease-up period, when there is insufficient cash flow to pay the debt. That projected amount, plus a cushion, is added into the loan as a reserve.”

The borrower should evaluate which terms are most important when seeking financing. “The best interest rate may not be the best loan,” says Gussis. “Each lender has unique features, such as longer amortizations, depository relationships, ongoing covenants, and prepayment penalties, to name a few. There are many qualified loan advisors who can assist in finding the best fit.”

Then there are labor costs, which have also increased. “It makes developing really difficult,” says Swerdlin. “While we work on the demand side, it’s a positive that we also don’t have a huge supply of new projects. It’s not great for the developer, but it also creates a net positive for the industry because it’s not creating a supply and demand imbalance.”

Hill agrees. “While developers are having a harder time finding projects that pencil, it might also be a blessing in disguise because many markets remain oversaturated due to significant new supply that has been added in recent years,” he says. “Self-storage has out-performed for many years, which has attracted a lot of investors and resulted in a proliferation of new projects. A little bit less development right now isn’t necessarily a bad thing.”

Hill concurs. “There is plenty of money on both the debt and equity side looking for exposure to self-storage,” he says. “The market is functioning and there is plenty of liquidity. It’s just more difficult to pencil deals because everything is expensive to build, buy, and finance. And then there are operational headwinds that make the cash flow underwriting more difficult.”

Gussis subscribes that the spicket is far from dry. “It’s a matter of living with the new reality,” he says. “I can also tell you that we don’t know what we don’t know and nobody can predict market disruption that is caused by factors out of your control. For example, government actions could cause positive or negative results to businesses with little warning.”

Gussis also points to the ability to manage existing customer rates. “Consumers, particularly in the past couple years, are used to increasing prices and seem to be largely OK with the increases in rates,” he says, adding that many properties have had nice growth to offset the increased interests. “To put some numbers to it, if the loan rate increased 2 percent from your current rate, and you were seeking a new loan with a 25-year amortization, your NOI would need to have increased 22.06 percent to achieve the same loan amount.”

For facilities with a decreased NOI, Swerdlin says it’s largely due to the post-pandemic market correction, not higher interests. “Self-storage had the biggest increase in demand in 2020 through 2022. It was something we had never seen before. When you experience something like that, you’re going to have a period where you normalize again,” he says, likening it to driving at 150 miles per hour and braking suddenly to 100 miles per hour. “It was a massive deceleration in investment activity. It’s still a net positive, but due to the magnitude of the change, it feels drastic.”

While such a sudden shift may make some operators feel out of sorts, Swerdlin doesn’t necessarily see it as a negative thing. “The volatility creates opportunity,” he says, “but when you have an unsustainable growth rate, it becomes a lot more difficult to manage capital, operations, and employees.”

Nevertheless, there are still plenty of opportunities in this landscape. “If you were looking to buy a storage facility in ‘21 or ‘22, there would be a bidding war,” Taylor adds. “Now, fewer people are going for the same facility. There’s more room for negotiation with the sellers. And if you’re a developer, there’s probably not another developer looking to deliver storage in the same timeframe, so they don’t have to worry about it during their lease-up. There’s nothing worse to fill up a facility than when there’s someone else doing the same thing across the street.”

This is not to say that demand has come to a standstill. Swerdlin adds that the same way many people are currently unable to afford buying a home, there are existing homeowners who may need more space but are hesitant to sell their home because they purchased it when rates were lower. This means they turn to self-storage for the items they don’t need to have in their homes. “People are finding the utility of storage to solve other problems because they’re trying to stay at their home much longer than planned.”

But it’s not all doom and gloom. Swerdlin believes that the current rates are unsustainable. “Something’s gotta give,” he says. “And when housing returns to normal, it’ll be a net positive for storage.”

For her part, Taylor doesn’t want to make predictions. “I like to pay attention to what the Fed is saying. They met in late January and decided to hold things where they are right now,” she says. “It seems like they’re taking a wait-and-see approach to see further progress in the inflation data before delivering another rate cut.”

Hill explains that self-storage has held up well compared to other property types, such as office space. “Industrial and storage have both done very well,” he says. “Even though there are challenges, self-storage has outperformed most other commercial real estate property types, so it remains a very attractive place for investors to look for deals and to put their capital to work.”

Hill’s confirming like what most people in the industry probably suspected, since it’s unlikely that any of you are getting your arms twisted to remain in self-storage. If there is one thing that remains constant in the industry—in addition to the high caliber people it tends to attract— it’s that it’s profitable.

In the words of Isaac Newton: “What goes up, must come down.” So be patient and carry on.