May 24, 2024 - 0 Comments - Self Storage -

Video: Moody’s Analytics Senior Economist Ermengarde Jabir Provides Self-Storage Real Estate Update

A Deep-Dive Discussion into the Resilient Self-Storage Market

In a recent episode of America’s Commercial Real Estate Show the spotlight was on the self-storage sector. The discussion featured Ermengarde Jabir from Moody’s Analytics, who provided valuable insights into the current trends, challenges, and future projections for the self-storage industry. Moody’s Analytics provides financial intelligence and analytical tools, including for commercial real estate.

Self-Storage: A Sector in Transition

The self-storage industry has shown remarkable resilience, particularly during the early 2020s. It was one of the few property types that thrived during the COVID-19 pandemic, maintaining high occupancy rates and strong demand. However, as the market adjusts to post-pandemic realities, some shifts are becoming evident.

Occupancy Trends: Historically, self-storage exhibits significant seasonality. The first and fourth quarters typically see higher vacancy rates due to lower moving activity during these periods. In the first quarter of 2024, the national vacancy rate for self-storage stood at 13.3%. While this is slightly elevated, it is expected to stabilize around 12.7% by the end of the year, aligning with 2023 figures. Looking ahead, vacancy rates are projected to decrease to the low 12s and high 11s by 2025 and 2026, respectively.

Rental Rates: Both climate-controlled and non-climate-controlled units have experienced a decline in rental rates. The trend started in 2023, with a 3.4% drop in climate-controlled unit rents. This decline continued into the first quarter of 2024 but at a slower pace, indicating that the worst of the rate drops may be behind us. Projections suggest a slight decline of 6% for climate-controlled units by the end of 2024, followed by modest growth in subsequent years.

Supply and Demand Dynamics

One of the critical factors influencing the self-storage market is the supply pipeline. Jabir highlighted a noticeable slowdown in new supply, driven by higher construction costs, labor shortages, and rising interest rates. The number of new units coming online has decreased significantly from previous years. For instance, while 125,000 units were completed in 2023, only 20,000 units were added in the first quarter of 2024. This trend is expected to continue, with completions slowing down to just over 100,000 units by 2025.

Self-Storage Investment and Cap Rates

Despite the challenges, investor demand for self-storage remains robust. Cap rates, although slightly elevated, continue to be attractive, particularly for high-performing properties. The sector’s ability to maintain comparatively low cap rates underscores its perceived stability and long-term viability.

Future Outlook

The future of the self-storage industry appears positive, albeit with moderated growth. As new supply diminishes and demand stabilizes, both occupancy rates and rental rates are expected to improve gradually. The industry’s performance will also benefit from ongoing domestic migration trends, particularly to the Sun Belt regions, and a steady influx of foreign immigrants.


The self-storage sector has demonstrated its resilience and adaptability in the face of economic fluctuations. While the market is currently experiencing a period of recalibration, the long-term outlook remains optimistic. Investors and stakeholders can expect steady, sustainable growth as the sector continues to adapt to changing market conditions.