Over the past several years, the self-storage industry has found itself operating in a unique and, at times, contradictory environment. On one hand, operating fundamentals, particularly occupancy and rental rate growth, have softened meaningfully from their pandemic-era highs. On the other hand, investor demand for self-storage remains robust, capital is plentiful, and asset values continue to hold firm with cap rates being lower than historical averages considering the cost of debt today. This divergence between operating performance and investment demand has created one of the most nuanced ownership environments we have seen in recent memory.
To understand where we are today, it is important to revisit the extraordinary period self-storage experienced between 2020 and 2023. Fueled by unprecedented household mobility, stimulus-driven consumer spending, and operational pricing power, self-storage operators saw historic gains in both occupancy and rental rates. Many facilities achieved occupancy levels well into the mid-90% range, while street rates and in-place rents climbed rapidly. These gains translated directly into significant NOI growth and, in turn, record-high asset valuations.
However, as new supply was delivered across many markets and household mobility normalized, operating performance began to moderate. Throughout 2024, 2025, and now into 2026, the industry has experienced a period of recalibration. Occupancy levels across many portfolios have declined from peak levels, often settling into the mid-80% range depending on the market. Rental rate growth has slowed, and in many cases, operators have had to offer concessions or moderate rate increases to maintain occupancy and tenant velocity. The softening in operating fundamentals has reset the valuations of all self-storage properties, and only time will tell where valuations will stabilize. This softness is not indicative of a broken asset class. Rather, it reflects a normalization of historically elevated performance combined with the impact of new supply deliveries. Many development projects that were delivered during the peak years of 2020 and 2023 have since continued to stabilize into a more balanced demand environment. As a result, operators are competing more actively for tenants, and the operating environment has become more management-intensive.
While operating fundamentals have softened, the investment environment tells a very different story. Capital targeting self-storage investments remains abundant as institutional investors, private equity groups, REITs, and private buyers continue to view self-storage as one of the most durable and attractive commercial real estate sectors. This sustained capital demand has had a material impact on asset valuations. Despite softer operating fundamentals, cap rates have remained resilient. This is a direct function of the amount of capital actively seeking placement in the sector. From a valuation perspective, this creates a window of opportunity for owners looking to sell. Buyers are still willing to price assets based on forward NOI projections and long-term confidence in the asset class, rather than strictly the current in-place income.
However, it is equally important to recognize that the operating environment is unlikely to shift materially in the near term. New supply deliveries are continuing in many markets, and while development starts have slowed, the existing pipeline will take time to fully absorb. Occupancy and rental rate growth may remain measured over the next several years as markets work through this supply. With the rapidly changing customer demographics, instability in the economy, and weakening consumer buying power, it could take several years to work through the operating environment.
For owners, this creates a clear strategic inflection point. If you have been considering a sale, today’s market presents a compelling opportunity. Values remain strong, buyer demand is deep, and capital is highly competitive. This combination allows owners to monetize their assets at attractive pricing levels relative to softer current operating conditions.
Conversely, if your strategy is to hold, it is important to do so with a long-term perspective. The next phase of the cycle will require patience and operational discipline. Owners who believe in the long-term strength of their assets and markets should be prepared to hold through this normalization period, which may take several years to fully play out. Over time, as supply moderates and demand continues its steady long-term growth, operating fundamentals are expected to strengthen once again. But as the self-storage industry matures and consolidates, it is clear that the market is and will continue to be competitive.
Self-storage remains one of the most compelling commercial real estate asset classes available today. Its long-term demand drivers, including population mobility, customer demographic shifts, household formation, downsizing trends, and business storage needs, remain firmly intact. The current softness in operations reflects a cyclical adjustment, not a structural decline.
Today’s market presents owners with a clear choice: capitalize on strong valuations while capital remains aggressive and debt is available, or maintain conviction in the long-term outlook and hold through the current operating cycle. At Argus Self Storage Advisors, we continue to see firsthand the depth of buyer demand and the strength of pricing across the country. For owners evaluating their options, the current environment offers both opportunity and clarity. Whether your strategy is to sell now or hold for the next phase of the cycle, making an informed and deliberate decision has never been more important.
Author: Ben Vestal, Argus Self Storage Advisors
