📦📉 “Self-Storage Market 2025: Why Tertiary Markets Are Struggling (And Where Deals Are Getting Done) 📈🏢”

🏬📊 “Self-Storage Industry Report 2025: Rate Stabilization, REIT Trends & What Investors Must Know 🔍💼”

Self-Storage Market Report 2025 — What Investors Need to Know

The self-storage industry enters 2025 with cautious optimism. Performance varies widely by market type, operator profile, and supply pipelines, but three themes define today’s landscape:

1.Tertiary market liquidity challenges

2.No clear “herd mentality” among operators this year

3.Early signs of rate stabilization in select, supply-disciplined markets

Below is a fully organized breakdown designed for commercial real estate investors, self-storage owners, lenders, and acquisition teams looking to understand today’s market direction.

1. Tertiary Markets: Liquidity Remains Tight

Across conference conversations and operator interviews, one challenge continues to dominate: moving self-storage assets in tertiary markets is difficult.

Smaller Buyer Pools

• Investors willing to purchase tertiary self-storage assets have tightened dramatically.
• Flat performance or pro-forma-heavy underwriting turns buyers away.
• Deals priced based on 2022–23 expectations are no longer clearing the market.

Shift in Buyer Strategy

For years, many groups adopted a “portfolio approach,” spreading assets across primary, secondary, and tertiary markets.
Today, buyers prefer:

·Markets with stable demand

·Clear rate recovery trajectories

·Lower new-supply risk

This reallocation is pushing tertiary values down — often materially below expectations set 18–24 months ago.

Where Deals Are Happening

Despite challenges, tertiary deals are still closing when:

·Operators already have a regional footprint

·Buyers possess operational efficiencies in that geography

·Assets are well-run and produce consistent occupancy

However, the broad, fast-moving tertiary trades of recent years have slowed significantly.

2. No “Herd Mentality” in 2025: A Deal-by-Deal Market

At both the Austin SSA and Las Vegas SSA conferences, one theme stood out:
There is no dominant acquisition or development strategy this year.

Operators Are Divided

·Some are aggressively buying, believing pricing is near the bottom.

·Others remain completely inactive, citing high capital costs and uncertain demand.

·Many are selectively active, chasing deals only within tight geographic or operational filters.

Unlike prior cycles—“build everything,” “raise rates everywhere,” or “buy any under-managed deal”—2025 is not a herd-mentality year.
Operators are moving independently, guided by micro-market fundamentals rather than industry-wide narratives.

**3. Have Rates Finally Stabilized? Early Signs Say: In Some Markets, Yes.”

Yardi’s September 2025 report shows the first signs of a turning point after nearly three years of downward pressure.

National Indicators

·National YoY advertised rate growth: +0.9%

·Average rent per square foot: $16.80

·Directionally positive — even if modest

REITs vs. Non-REIT Operators

·REIT same-store advertised rents: +2.6% YoY

·Non-REIT operators: +0.1% YoY

Why the difference?
REITs benefit from:

·Scale

·Centralized pricing technology

·Superior digital marketing

·Lower capital costs

Top Markets With Rate Growth (Low New Supply)

Markets seeing the strongest YoY increases (2.5–3.6%):

·Detroit

·Chicago

·Minneapolis

·Indianapolis

These metros share a common trait: limited new construction.

Markets Still Under Pressure (Oversupplied)

Declines of -0.6% to -2.3% persist in:

·Austin

·Salt Lake City

·San Diego

·Denver

·San Antonio

These markets face ongoing lease-up activity and oversupplied pipelines, delaying recovery.

The Takeaway

Rate stabilization is emerging — but only in markets where supply is under control.
Sun Belt metros with heavy development pipelines will take longer to recover.

4. REIT Performance Snapshot

Quarterly operating metrics (Data1–Data5) show moderate, steady improvement from 2023 through 2025, with transaction activity picking up in 2025 Q3.

The REIT landscape suggests:

·Stability returning

·Capital markets activity increasing

·Some renewed appetite for acquisitions

This aligns with the broader trend of selective, not aggressive, investment behavior.

5. Economic Context: Inflation Trending Toward Normal

Inflation peaked in 2023 and moved toward a more normalized range through 2024–25:

Quarter

YoY Inflation

2023 Q3

3.7%

2023 Q4

3.4%

2024 Q1

3.5%

2024 Q2

3.0%

2024 Q3

2.4%

2024 Q4

2.9%

2025 Q1

2.4%

2025 Q2

2.7%

Inflation hovering near the Fed’s informal comfort zone supports the case for gradual rate stability, which could help storage fundamentals stabilize further in 2025–26.

Conclusion

The self-storage industry in 2025 is defined by selective opportunity, not broad momentum.

·Tertiary markets remain difficult unless operators have regional scale.

·Investment strategies are fragmented — no clear consensus.

·Rate stabilization is emerging in supply-disciplined metros.

For investors and owners, this is a market won by precision, not by volume.
Underwriting discipline, operational strength, and micro-market knowledge will determine who succeeds.

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© 2023-2024 Bill Rapp, Broker Associate, eXp Commercial Viking Enterprise Team