Self-Storage: Resilient Sector Recovers from ’20-’21 Oversupply

Here are some interesting metrics about the self-storage industry:

• Demand has declined due to a gridlocked housing market; occupancy rates fell to 92%

• Even with a decrease in mortgage rates during 2025, there remained a buyer-seller gap, which reduced transactions and dampened relocation-driven storage demand

Yet, despite it all, DXD Capital’s Quarterly Self-Storage report suggested a sector that remains robust, despite the shifting fundamentals.

“The resilience of the self-storage sector continues to be impressive, especially considering the recent slowdown in the housing market,” DXD Capital’s Capital Principal and Fund Manager Drew Dolan told Connect CRE. “Maintaining a national occupancy of around 93% while still maintaining modest, positive rent growth is a testament to the sector’s underlying fundamentals.”

About That Rent Growth

The report noted that achieved rental rates surpassed in-store rates in late 2025, “signaling a renewed focus on occupancy over rate growth.” To that end, while the major storage companies cut their in-store pricing, “this winter push for occupancy may prove strategic,” the report said.

Dolan pointed out that cold-weather tenants tend to stay longer than those who rent storage units during the summer. “Planned moves are heavily concentrated in the summer for logistical reasons, such as school schedules and weather,” he explained. “This creates a significant, but often temporary, surge in demand.”

As cooler weather arrives, that demand slows, and the focus shifts to customers who require longer-term storage. “This becomes a much larger proportion of our new rentals,” Dolan said.

Oversupplied No Longer

The 2020-2021 development boom led to oversupply in certain areas. But that seems to be abating. The report, citing Yardi Matrix, said that new construction starts are in decline, with 59 million square feet delivered in 2025 (versus a peak of 79.2 million square feet in 2020). Furthermore, Yardi Matrix forecasts deliveries of 51 million square feet and 44 million square feet in 2026 and 2026, respectively.

But Dolan cautioned that a broad-brushed national lens obscures local and geographic performances. “Business is won or lost within a three-mile radius of a facility,” he said. “Our strategy is to identify submarkets that remain underserved, even within a metro area that may appear saturated overall.”

Additionally, Dolan said that the current construction pullback isn’t so much a concern as it is the beginning of the next cycle.

Outlook: No Major Shifts

Dolan said that DXD Capital’s outlook for the remainder of the year is “stabilization and modest growth, driven primarily by a tightening of new supply.”

The forecast also calls for industry-wide rent growth between 2% and 4%. However, “well-located facilities in submarkets with limited new supply will likely outperform that benchmark, while those in more saturated areas may see flat or even negative rent growth,” Dolan added.

Meanwhile, demographic changes should continue to fuel demand, especially among younger cohorts. One reason is the shrinking of available living space due to higher housing costs.

Dolan explained that 19% of Millennials use self-storage, compared with 5% of Baby Boomers. “As Gen Z enters its prime renting and home-buying years, we anticipate their usage rates will be even higher, solidifying this durable, generational demand for decades to come,” Dolan added.