Real Assets: Fundamentals
Unlocking Self-Storage: A strategic framework for market selection
April 22, 2025 5 Minute Read Time
Author
Senior Director – Americas Research
Introduction
The self-storage sector has experienced significant volatility in recent years as demand and street rents soared during the pandemic and then fell as interest rates rose and housing market activity—a key driver of storage demand—fell to the lowest levels on record. Deep discounts led to surging demand in 2024 with net absorption totaling nearly 30 million square feet, the highest level since 2021. Street rents fell by more than 10% for the second consecutive year. With existing customer rent increases (ECRI) routinely exceeding 15% per year, in-place rents are now more than 40% above prevailing street rents, leading to negative NOI growth in the aggregate for only the second time on record.
The dislocation in market fundamentals and income growth offers an opportunity to acquire a rapidly-institutionalizing sector poised for long-term growth when housing market activity picks up, releasing pent-up demand for storage and driving above-trend demand.
To aid institutional investors in evaluating self-storage opportunities, we have developed a market screening framework that considers various factors influencing market performance. This framework is designed to inform investment decisions and guide due diligence.
Self-storage market criteria
The market screening framework evaluates markets based on the following criteria:
- Occupied self-storage space per capita (2024): This metric assesses the level of self-storage usage in each market. Warm-weather markets in Florida, Texas, and the Southwest generally have the highest rates of storage usage—in no small part because homes in these regions tend not to have basements. Conversely, Northeast and Midwest markets, where basements are common, have the lowest rates of storage usage.
- CBRE Investment Management rent growth forecast (2024-2029): CBRE IM forecasts self-storage street rent growth across more than 50 markets, considering current vacancies, expected supply and market growth dynamics.
- Market vacancy rate (2024): Lower vacancy rates indicate higher demand and market stability.
- Market occupancy rate relative to 2014-2019: This factor compares current occupancy rates to pre-COVID levels.
- Existing home sales per household (2024): Active housing markets contribute to self-storage demand.
- Average household growth rate (2014-2019): Demographic growth supports long-term market viability.
- Expected growth in self-storage inventory (2024-2026): Supply growth impacts market competition and pricing.
Methodology
We use standard z-score methodology to normalize these variables and rank markets based on their weighted average score. Markets are then categorized into top, middle, and bottom tiers based on their overall scores.
Top-rated markets
Fast-growing Sunbelt markets with high levels of self-storage usage, relatively active housing markets and strong rent growth outlooks rank highest (Figure 1). Las Vegas and Houston stand alone with overall scores above 1.0, driven by Las Vegas’ rent growth outlook and Houston’s high levels of storage usage and active housing market. Other highly-rated markets include Salt Lake City, Tampa-St. Petersburg, Jacksonville (FL), Raleigh-Durham, Phoenix and San Antonio—all Sunbelt markets with above-average rates of storage usage and rent growth forecasts.
Figure 1: Top-rated self-storage markets
Values show each factor’s relative contribution based on z-score and weight
Each factor is converted to a z-score by subtracting the average and dividing by the standard deviation. Chart shows the relative contribution of each factor to the overall score.
For illustrative purposes only. Based on CBRE Investment Management's subjective views and subject to change. There can be no assurance any targets or business initiatives will occur as expected. Forecasts are inherently uncertain and subject to change.
Mid-rated markets
Mid-rated markets include a mix of Midwest markets with lower rates of storage usage but solid fundamentals and above-average rent growth forecasts like Cincinnati, Oklahoma City, Minneapolis and Columbus, as well as Sunbelt markets with elevated vacancies and supply risk such as Denver, Atlanta and Nashville (Figure 2).
Figure 2: Mid-rated self-storage markets
Values show each factor’s relative contribution based on z-score and weight
Each factor is converted to a z-score by subtracting the average and dividing by the standard deviation. Chart shows the relative contribution of each factor to the overall score.
For illustrative purposes only. Based on CBRE Investment Management's subjective views and subject to change. There can be no assurance any targets or business initiatives will occur as expected. Forecasts are inherently uncertain and subject to change.
Lowest-rated markets
Coastal markets with low housing market activity and low rates of storage usage rank among the lowest-rated storage markets, including the Bay Area, Boston, New York/New Jersey and Southern California. Rust Belt markets such as Indianapolis, Detroit, Louisville Pittsburgh and Cleveland also feature lower storage usage, inactive housing markets and weaker rent growth forecasts (Figure 3).
Figure 3: Lowest-rated self-storage markets
Values show each factor’s relative contribution based on z-score and weight
Each factor is converted to a z-score by subtracting the average and dividing by the standard deviation. Chart shows the relative contribution of each factor to the overall score.
For illustrative purposes only. Based on CBRE Investment Management's subjective views and subject to change. There can be no assurance any targets or business initiatives will occur as expected. Forecasts are inherently uncertain and subject to change.
Conclusion
Our market selection framework provides a structured approach to evaluating markets for self-storage investments. We do not intend to red-line any markets via this approach, and we understand that micro-market dynamics are critical for self-storage performance. Rather, we hope that these criteria will help us and our investors ask the right questions and understand the structural risks facing various markets.