The 2025 self-storage market shows mixed results that need a closer look. Market resilience remains strong with transaction volume reaching nearly $2.85 billion in the first half of the year, just under one percent above 2023 levels. The third quarter tells a different story as same-store revenue dropped 0.6 percent and NOI decreased by 2.4 percent year-over-year.
The market’s performance indicators paint an interesting picture of contrasts. Valuations have fallen for six straight quarters to $159.00 per square foot. Yet October’s advertised street rates grew by a modest 0.7 percent year-over-year. The development pipeline stays active with 2,912 properties under development nationwide. About 53 million net rentable square feet are currently under construction. This complete self-storage market report 2025 gives you clarity through detailed market analysis.
Our analysis shows that REITs like Extra Space Storage have seen occupancy rates climb by 30 basis points year-over-year to 94.6%. We want to break down regional differences and investment possibilities. The self-storage sector continues to deliver stability and attract capital despite challenges. These factors make it a key sector to watch as we move toward 2026.
Self Storage Market Overview in 2025
“Our belief in the continued health of our customer base, the resiliency of our product and the gradual improvement of fundamentals have been directionally accurate, albeit the impact of new supply and the pace and magnitude of improvement in new customer move-in rates have been more positive compared to our base case assumptions.” — Christopher P. Marr, President & Chief Executive Officer, CubeSmart
The self-storage market shows signs of stability in 2025 after experiencing rate compression and demand swings for two years. National advertised rents remain flat compared to last year. Climate-controlled units saw a slight uptick of 0.4% YOY, while non-climate-controlled units dropped by 0.4% YOY. REIT rents climbed 1.3% YOY by June 2025.
How the market performed compared to 2024
Self-storage sales nationwide reached $855.00 million in the first quarter of 2025. This represents a 37% jump from Q1 2024. The second quarter brought in $751.80 million across 400 transactions. The market’s stability marks a welcome change from last year’s ups and downs.
September 2025 brought good news. The industry saw its first uptick in rates after almost three years of decline. National advertised asking rents rose by 0.9%. Operators who dealt with aggressive discounting throughout 2024 can now breathe easier.
Different regions tell different stories. Midwest markets are doing well. Chicago leads with a 2.9% YOY increase, followed by Minneapolis at 1.3% YOY. These markets benefit from limited new supply. The Sunbelt isn’t as fortunate. Charlotte has dropped 1.4% YOY due to too much new supply.
Key economic factors influencing the sector
The housing market slowdown tops the list of concerns for self-storage investments. About 39% of survey participants highlighted this issue. Interest rates came second at 35%. Mortgage rates stayed close to 7% in 2025. This has frozen home sales and reduced storage move-ins related to housing changes.
Building costs remain high. Potential tariffs on construction materials and limited construction debt have slowed down new projects. Many developers put their projects on hold during Q2 2025.
Overview of self-storage market data
The first half of 2025 saw transactions worth $2.85 billion. This barely edges past the first half of 2023 by less than one percent. Self-storage values peaked at $174.00 per square foot in Q1 2023. Since then, they’ve dropped for six straight quarters, landing at $159.00 psf in Q2 2025.
Capitalization rates have risen to 7.4%, while the average price per square foot dropped to $109.31. The industry has 53.4 million NRSF of storage space under construction nationwide. This represents 2.7% of the existing stock, which is lower than in previous months.
Occupancy, Rent, and Revenue Trends
The self-storage market shows a complex mix of occupancy metrics and revenue performance as we approach 2026. Operators have managed to keep their resilience despite changing demand patterns.
Occupancy rates across major REITs
REIT self-storage sector occupancy rates have shown remarkable stability in 2025. Green Street estimates put the rates at approximately 93%. SmartStop leads the sector with 92.4% occupancy in Q3. Extra Space Storage reported Q2 occupancy of 94.6%, which represents a 30 basis points increase year-over-year. Performance varies substantially among operators. CubeSmart averaged 89.9% (down 80 basis points year-over-year), while National Storage Affiliates posted 84.5% (down 140 basis points). Public Storage shared some positive news with sequential improvement through October, and their year-over-year occupancy gap narrowed to just 30 basis points by late July.
Street rate trends for climate and non-climate units
Standard 10×10′ non-climate-controlled units have a national average street rate of USD 120.00 monthly (flat year-over-year). Climate-controlled units of the same size cost USD 136.00 (up 1.5% year-over-year). The monthly average for climate-controlled space stands at USD 149.00 (up 1.4%) across all unit sizes, while non-climate units average USD 137.00. Regional differences remain strong, with New York City leading national rates at approximately USD 253.00 monthly.
Same-store revenue and NOI performance
Financial metrics point to growing challenges. Same-store revenue fell 0.6% year-over-year in Q3, and net operating income decreased by 2.4%. The gap between street rents and contractual rents has expanded from 11% in 2020 to 48% in 2025. This highlights a fundamental change in revenue management. Operator results paint a mixed picture. Public Storage achieved 0.2% same-store revenue growth through effective expense control. Meanwhile, National Storage Affiliates saw a 2.6% revenue decline as expenses rose 4.9%.
Development Pipeline and Supply Dynamics
Self-storage construction activity shows a slowdown in 2025 as developers remain cautious about economic challenges. Yardi Matrix currently tracks 2,912 self-storage properties at different development stages. These include 709 properties under construction, 1,865 in planning, and 338 prospective properties. The under-construction pipeline makes up 2.6% of total inventory, which is down 10 basis points since September.
National construction pipeline status
The national under-construction pipeline has about 53 million net rentable square feet (NRSF), and we see it slowly shrinking. This slowdown comes after many projects were put on hold in Q2 2025. Yet completion forecasts have risen by 4.3% for 2025 and 4.6% for 2026, which shows more inventory in progress than expected. Construction starts through September 2025 reached 31.54 million NRSF, which is 7.8% lower than the same time in 2024.
Regional differences in new supply
Development patterns vary dramatically by region. Sarasota-Cape Coral leads the pack with construction at 9.2% of existing inventory. Phoenix follows at 6.8%, while Las Vegas stays active at 6.6%. Portland and San Francisco sit at the other end with just 0.6% of stock. Among Yardi’s top 30 metros, 17 markets have under-construction supply below the national average, especially in the Midwest and Sun Belt regions. Coastal markets draw more attention now because of their limited land and tight supply.
Impact of construction costs and financing
Construction costs remain at their highest levels since the pandemic started. Material costs drove the original increases, but labor costs now cause equal concern as minimum wages rise in most major markets. High interest rates and limited construction debt options have forced many projects to wait. Some markets still make development worthwhile where rental rates can cover the higher costs.
Investment Outlook and Strategic Insights
The self-storage market shows signs of adjustment as it finds its footing after major market changes. New patterns have emerged to help decision-makers plan their next moves.
Cap rate trends and valuation shifts
Self-storage values hit their peak at $174.00 per square foot in Q1 2023. Values have dropped by 12% to $159.00 psf in Q2 2025 after six straight quarters of decline. Cap rates now average 5.8%, up from their record low of 5.0% in late 2022. Class-A properties still command better rates between 5.0-5.5%. Class-B properties see higher rates ranging from 5.5% to 6.5%.
Investor sentiment and market confidence
Q1 2025 volume reached $855.00 million—jumping 37% from Q1 2024. Buyers outside the REIT sector led the charge with 85% of purchases. REITs only made up 7% of sales. Market stability seems likely as 56% of industry leaders expect cap rates to stay steady next year. New properties attract strong interest, with 38% of buyers choosing facilities built after 2010.
Tips for buyers and sellers in 2026
Buyers should:
- Keep underwriting conservative with flat rent growth and higher expense projections
- Check location details and nearby competition carefully
- Look for properties where management improvements or cost cuts can add value
Sellers should:
- Reset price expectations below 2021 peak levels
- Get financial records and operating data ready
- Time might be right in late 2026 if borrowing costs drop
Self-storage markets show promise heading into 2026. Growth opportunities exist, especially in coastal areas where limited supply and strong fundamentals support long-term success.
Conclusion
The self-storage market in 2025 tells an interesting story of resilience and adaptation. Market transactions rose slightly above 2023 levels in the first half of the year, despite economic challenges. Regional differences paint a complex picture – Midwest markets thrive while Sunbelt regions struggle with too much supply.
Market data reveals an industry in transition. Stability seems to be returning after six straight quarters of falling valuations and growing gaps between street rates and contractual rents. September 2025 brought the first small rate increases in almost three years – good news for operators who dealt with aggressive discounting throughout 2024.
New construction keeps slowing across the country but remains active in high-growth markets like Sarasota-Cape Coral and Phoenix. The market appears to be finding its balance through careful development and renewed investor interest. Non-REIT buyers now lead acquisitions with 85% of purchases, while REITs stay selective in their involvement.
Success in 2026 will depend on smart positioning. Buyers need conservative underwriting and thorough location analysis, while sellers should adjust their expectations from the 2021 peak. Coastal markets with limited supply offer some of the best long-term potential.
The self-storage sector keeps proving its strength even as challenges remain, especially with interest rates and housing market issues. Smart investors who understand regional differences and approach opportunities carefully can find selective openings as market conditions normalize. This adaptable asset class looks set to remain a stable part of diverse real estate portfolios as we head into 2026.