I hear partners, people I coach, and investors ask the question, “How can a smaller independent owner compete today with REITs or a big institutional player today? They have a lot more money and people, and their cost of capital is so low.”
Valid question, but the reality is, it’s not that hard to outperform them. Their size also creates inherent weaknesses.
I attended the recent ISS (Inside Self Storage) Expo in Las Vegas last week, and one of the sessions I sat in on was presented by Brad Lund, the CEO of Purely Storage, a California-based storage company that has about 40-something locations.
He reiterated what I already knew but did so in a well-presented way.
The goal of this episode is to terminate the myth once and for all that REITs outperform us smaller players. If they are outperforming you, perhaps there are some holes in how you operate and manage your facilities.
Let’s look at some facts.
2025 Same Store Revenue Growth
- Public Storage: 0%
- Extra Space: 0.1%
- CubeSmart: 0.5%
- NSA*: 2.3%
*{NSA is to be purchased by Public Storage in 2026}
{Source: MJ Partners Annual Report}
I sold my two created portfolios between 2019 and 2021. But I am in two expansion and multiple expansion, conversion, and development projects now. The few operating projects now that generated revenue, over 2025 generated a 5.56% in-store average rent revenue growth. That is over double what the best REIT did, who by the way is soon to be owned by Public Storage, who had a whopping 0% revenue increase last year.
What was your revenue increase from 2024 to 2025?
Was this just a fluke year? Let’s look. I looked up, using Google AI, to get what same store revenue growth was year by year from 2013 to 2020. If that data is accurate, here are the results.
REIT Average Yearly Revenue Growth 2013 – 2020
- Public Storage: 3.56%
- Extra Space: 4.89%
- CubeSmart: 5.20%
- NSA*: 5.05%
• {NSA went public in 2015; data is for 2015–2020 only}
During the same time period, our brands experienced a 6.62% average in-store annual rent growth.
If you were in business then, what was your in-store annual increase?
It is just a myth that smaller owners can’t compete with REITs.
Let’s look at why.
REITs Rely on Fees
A significant portion of their “in-store revenue growth” comes from fees. They have to have them to achieve the whopping 0% to 2.3% in-store revenue growth in 2025. All of the fees combined, especially their self-owned tenant protection, kept them from having extreme losses in revenue growth in 2025.
They live on them.
As a smaller operator, we have fees too, but we can waive or reduce if we need to get a rental. They only make up less than 4% of our total revenue. I am not sure what percent of REIT revenue the fees account for, but my bet is it is higher.
They will reduce rent before they reduce fees, especially in facilities they do third-party management in.
They Bait Their Customers
- $1 first month rent
- $25 first month rent
- 50% off first 3 months
These are typical ads or promotions you see online for REITs. Then immediately… drastic price increases.
Transparency laws are being created state by state to deal with this. It just happens to be the game they play today.
You can educate customers and charge them fairly. This increases their length of stay, and with fair but steady price increases combined with longer length of stay, your revenue growth will easily surpass theirs. It certainly has for us.
REITs Rely On Customer-Centric Rate Increases
Customer-centric rate increases mean, in essence, the longer you stay, the more often and higher your rate increases are compared to other customers.
It is normal to be paying well above the street rate or average in-store rate if you don’t complain. They will actually raise your rent until you cry uncle and move out.
THEY DON’T CARE IF YOU MOVE OUT BECAUSE THEY WILL BAIT AND GET SOMEONE NEW IN, THEN START THE PROCESS OVER.
All you have to do is not play those games. Treat customers fairly and how you would want to be treated. Have rent increases be tied to a fair percentage increase or even to unit occupancy levels or something more fair.
This increases their length of stay, and your revenue growth will easily surpass theirs. It certainly has for us.
REITs Operate Nationally
REITs have hundreds of stores, operate in hundreds of markets, and have hundreds of employees. They have shareholders and share prices to focus on.
As small owners, we have individual facilities in very local markets to focus on. Self-storage is a very local product. We can out-customer-service them easily. We can pay our employees well and keep higher-quality personnel who know the names of the customers.
It is much easier for us to develop great customer relationships, not to mention with vendors, apartments, and other businesses in the local markets.
We focus on our individual markets, not on quarterly share prices.
Just treat every customer like a VIP. They are the source of our revenue. I think this gets stepped over in the boardrooms of the REITs as they make strategic decisions.
In essence, just look at what they do… then do the opposite. At least today, that is my advice.
It is a total myth that REITs outperform us smaller investors, and it is time to terminate it once and for all.
Just my thoughts today, and I would love to hear your thoughts on the subject.
