Question #
What factors are contributing to the stagnation of the housing market and its impact on the self-storage industry?
Answer #
Again, you may like this or not, but the one thing the market and the economy like is some degree of predictability.
We now must learn to operate inside a different context.
The winners today will be the ones that can.
A big driver for self-storage has traditionally been the housing market and people relocating.
There are several factors keeping this industry muted:
High mortgage rates.
A 6%+ mortgage dramatically increases monthly payments compared with the 2% to 3% loans many homeowners locked in during 2020-2021.
Affordability remains challenging.
Even though price growth has slowed, prices themselves remain elevated.
Buyers now have more options than they did a couple of years ago, reducing bidding wars in many markets.
“Locked-in” homeowners.
Many owners are reluctant to sell because doing so would mean giving up a very low mortgage rate.
Traditionally, the housing industry has been a big driver for storage, and it is very stagnant now compared to past years.
The figures below are approximate national net rentable square feet (NRSF) completed each year based on Yardi Matrix, StorageCafe, and my own industry research.
Yes, but a little slower.
Construction starts have fallen sharply because of higher interest rates, tighter construction lending, and weaker rent growth.
The current development pipeline is significantly smaller than it was in 2022-2023.
2026: 53-54 million sq.
2027: 45 million sq.
2028: 39 million sq.
The supply wave has been one of the primary reasons self-storage fundamentals softened over the last few years:
Source: Why the Smaller Investor Can Win in Today’s Self-Storage Market
