I just read an article in the ISS about the third quarter REIT performance. Here are some of my takeaways.

Most of you know my feelings about them, but if you pay attention to these numbers, they tell you something about where this industry is and may be headed.

I do pay attention. Here is what I see.

Takeaway 1: It Appears the Industry Is Turning

All three REITs posted positive net operating income (NOI) growth in Q3. That’s the first time in a while from my memory. That may not sound exciting, but after the beating this industry has taken from oversupply and compressed rates over the past two years, I think it matters.

This data tells me it appears the cycle is shifting.

Now, I am not saying we are out of the woods and all rainbows, but I am saying the numbers are pointing in the right direction, and as someone who underwrites deals for a living, I watch these numbers closely.

Takeaway 2: It’s Occupancy, Not Rate Increases, Driving the Recovery

Here is something I think is worth noting. The revenue improvement these companies are reporting looks like it is coming from higher occupancy, not just from squeezing more out of existing tenants through rate increases, although they are excellent at that (I say, mumbling under my breath).

Extra Space ended the quarter at 94% occupancy. Public Storage averaged 92.5%. CubeSmart averaged 89%. Those are healthy numbers. When more units are filled, NOI improves even without as aggressive as normal rent hikes.

That tells me the oversupply that crushed us in the last couple of years is being absorbed. The market is perhaps filling back up.

This could be an important distinction, meaning the recovery has a foundation.

Takeaway 3: The Construction Pipeline Is Drying Up

This is the number that caught my attention most. CubeSmart has exactly one development underway right now, a joint venture in New York.

Public Storage’s remaining development spend is spread over the next 18 to 24 months and winding down.

I have been saying for a while that the building spree appears to be slowing down. These Q3 REIT reports appear to confirm it. When you combine a slowing supply pipeline with recovering occupancy, you get a setup that favors existing operators. If demand holds, 2027 and 2028 could be meaningfully better than the last two years.

Of course, trade area by trade area, the picture will vary. It always does in this hyper-local business. But at least the macro trend is pointing the right way.

Public Storage Is in Full Acquisition Mode

While CubeSmart and Extra Space are growing organically, Public Storage is buying. Year to date, they have acquired or are under contract for 65 facilities comprising 4.7 million net rentable square feet, $713.2 million worth of deals.

Wow. That’s a lot of deals.

They have been a large buyer of our projects over the last fifteen years as well.

They also completed their acquisitions of National Storage Affiliates Trust and Public Storage Canada, adding more than 1,100 stores to their portfolio in one move.

That tells me two things. First, they believe the bottom is in or close to it (I don’t think you don’t deploy $713 million in one year unless you think you are buying at or near the right time). Second, the market is becoming even more concentrated at the top. That is the reality we operate in.

Takeaway 4: Extra Space Is Running a Tight Ship

My least favorite REIT, Extra Space was the standout performer this quarter. Same-store revenue up 2.7%. Expenses down 1.8%. NOI up 4.6%. When a company that size can reduce operating costs while growing revenue, they are running a tight operation.

I do not love their pricing strategies, I never have, but I can read a P&L. That is a well-run business.

Takeaway 5: Move-In Rents Are Rebounding

Public Storage reported move-in rents up 1.6% in Q3 after a 2.4% decline in Q1. That rebound is a signal. It suggests a floor is forming on rate pressure. It is early, and this may just be an anomaly, but it is worth watching.

The Watch Item: Third-Party Management Is Exploding

Here is something I do not think enough smaller operators are paying attention to. CubeSmart added 32 stores to its third-party management platform in Q3 alone. They now manage 882 locations. Extra Space added 78 stores in a single quarter and now manages 2,371 third-party and JV locations.

Think about what that means. The REITs now have pricing and occupancy data on facilities they do not own in markets all over the country. Combining those with their data, they are building a market intelligence network that has a lot of depth.

If a REIT is managing a competing facility in your trade area, they know your market as well as you do. That is a competitive dynamic worth taking seriously.

What This Means for Us

Here is my read as a smaller independent operator:

The good news is that the cycle appears to be turning. Occupancy is recovering, the supply pipeline is tightening, and the data points to a better 2027-2028 for existing operators who have held on through the tough stretch.

The cautionary news is that the big players are consolidating fast and their revenue management machine is not going anywhere, at least for a while. Perhaps state by state, it will be dismantled. However, dynamic pricing worked for them this quarter and will continue to work. That is the environment we compete in.

And the actionable takeaway: if you have been waiting to see where the bottom is before making a move, acquiring, expanding, or refinancing, the Q3 numbers suggest the bottom may be right about here.

I am watching the next two quarters closely. But for the first time in a while, the data gives me something to be encouraged about.