Self-Storage National Report

Economic forces normalizing demand. The self-storage sector is transitioning from the powerful tailwinds created by the pandemic and pent-up household formation to a more normal, seasonal demand climate. Elevated residential mortgage rates, which doubled in less than 20 months, together with reduced consumer sentiment, moderated household formation last year. The resulting reduction of population mobility has weighed on self-storage absorption. As a result, vacancy levels have been trending upward in many markets, while asking rents have declined. Nevertheless, there was roughly 200,000 more occupied square feet at midyear than in 2019. In-place rates among this larger pool of renters are continuing on an upward trend across most of the major operators, bolstering the overall sector. These trends will likely remain in play through the remainder of this year, while the prospect of an economic soft landing, together with stabilizing Federal Reserve policies, have the potential to reinforce current and future self-storage space demand as inflation lessens.