Market Research
Unpacking self storage: A sector on the move
By John Affleck, Senior Director – Americas Research
November 6, 2024

Executive Summary & Key Calls
Long-term trends around demographics, housing and climate change will get the U.S. self storage sector moving again
Since NCREIF began covering the sector in 2005, self storage has delivered the highest average annual total returns of any sector. The pandemic triggered record demand for self storage and unprecedented rent gains, but conditions have normalized since 2023 as interest rates rose and housing market activity slowed. We see compelling long-term, secular drivers for growth in the self storage sector including a reactivated housing market, ongoing migration to Sunbelt markets, advances in analytics and the effects of climate change.
Key call 1: The post-COVID downturn in the sector is showing signs of stabilizing
Demand and property values have remained relatively resilient, supply risk has fallen and prices are showing early signs of improvement.
Key call 2: Multiple factors will drive long-term growth in self storage
A robust combination of housing, demographic and climate trends, combined with ongoing institutionalization of the sector, supports long-term growth of self storage.
Key call 3: Sophisticated operators will deliver outperformance through operational analytics
Self storage performance depends on an operator’s ability to attract new tenants—often with teaser rates and discounts—and then impose existing customer rent increases (ECRIs), which can exceed 10% per year. The best operators employ advanced data analytics around customer behavior to optimize discounts and teaser rents against long-term client retention and income growth.
What happened to the NPI’s best-performing sector?
U.S. self storage was the best performing real estate sector between its debut in the NCREIF Property Index (NPI) in 2005 and 2022. Unlevered total returns of 32% in 2021 and 16% in 2022 (Figure 1) were second only to industrial, and total returns since 2010 are nearly double the overall NPI. However, as the fundamental picture deteriorated, performance turned negative in 2023 and is expected to be weak through 2025. The extended period of weakness relates to our forecast of flat rent growth and declines in net operating income as high in-place rents revert to lower street rents.
Figure 1: Self storage vs. overall NPI total returns
COVID-driven boom to post-COVID downturn
The multi-decade growth trend in self storage accelerated during the COVID pandemic and demand spiked to a new high as working and living spaces changed rapidly. A combination of hasty relocations, increased home sales and makeshift offices and classrooms created an urgent need for storage space. Self storage vacancies fell below 3%, well below the industry standard of 8%, triggering an unprecedented 40% increase in move-in rents from June 2020 to March 2022 (Figure 2).
While the world reopened after COVID lockdowns, a combination of rapid price inflation followed by rising interest rates sharply reduced housing activity. Lower housing turnover due to high mortgage rates, coupled with more normal day-to-day life after COVID, led to reduced demand for self storage. By the start of 2024, self storage vacancies rose above 8% and move-in rents fell 15%.
However, post-COVID self storage market conditions remain consistent with a healthy self storage market. Vacancies of around 8% on average reflect pre-COVID market conditions and the industry target for vacancy, and move-in rents of $143 per month, on average, remain well above the 2019 average of $124.
Figure 2: Self storage effective move-in rent and vacancy rate
Recent signs of stabilization and improvement
While down from peak levels, demand for storage remains above pre-COVID levels. We estimate that 10.2% of U.S. households are using self storage today, compared with 9.3% in 2019, and that the average U.S. household uses 13.4 square feet (SF) of self storage space, also up from the 2019 level of 12.1 SF. Our outlook anticipates that more and more households will use self storage, and that in a decade the penetration rate will approach 16% of households (Figure 3).
Figure 3: Estimated penetration rate and occupied space (SF) per household
However, supply remains a risk because self storage construction has not slowed as much as other sectors (Figure 4). Given the fierce competition to attract tenants and the dependence on ECRI to drive revenue, new supply can drive move-in rents lower. Indeed, move-in rents fell consistently during the record deliveries from 2016-2020. Given the current supply overhang and ongoing construction, our forecast does not anticipate move-in rent growth nationally until 2026.
Figure 4: Supply, demand and vacancy outlook
Markets such as Las Vegas, Salt Lake City, Columbus and Nashville are poised to deliver near-term rent gains due to low vacancies, limited new supply and strong demographic growth. We expect slower-growing Northeast and Midwest markets with lower storage use and heavily-supplied Sunbelt markets such as Houston and Austin to deliver lower effective move-in rent growth.
Multiple long-term drivers of demand underpin future growth
Ask any seasoned self storage operator and they’ll tell you that demand for their service depends on the four Ds: downsizing, decluttering, divorce and death. We also have found four Bs that support higher storage demand: basements, babies, budget and bedrooms.
Our empirical analysis found that three of the four Ds are indeed statistically linked to self storage demand, as presented in Figure 5. The rise in morbidity rate, expressed as deaths per 100,000 population, has broadly tracked the increase in occupied self storage space per household—and contributed to the spike in self storage demand during the pandemic. To estimate decluttering, we observe the rate of working from home, which rose steadily since the early 2000s and also spiked during the pandemic. Housing market activity—for downsizing—fell sharply after the Global Financial Crisis and the pandemic, coinciding with and likely contributing to sharp declines in self storage occupancy rates. Only the divorce rate, which has steadily declined since the early 2000s, shows no statistically significant connection to self storage demand—which is not to say that divorces don’t create self storage demand, but rather that divorce is unlikely to drive higher self storage demand going forward.
Figure 5: The Four Ds: Downsizing, decluttering, divorce and death
The Four Bs: Basements, babies, budget and bedrooms
The four Ds help explain self storage demand trends over time, but what explains differences in demand across markets? Why do Texas markets show the highest rates of self storage usage, while Northeast markets show the lowest rates? The four Bs are all statistically meaningful indicators of self storage usage across markets.
- Basements: The most important of the four Bs is a necessary design feature in Northeast and Midwest markets, where the ground can freeze during the winter, that also serves as convenient built-in storage. In Texas, Florida and other warm climate markets, basements are rare and consequently self storage usage rates are higher (Figure 6).
Figure 6: Self storage usage and % of single family homes with basements
- Babies: Families with babies and young children are more likely to use external storage, first as a place to store items expelled from the home to make way for cribs and dressers, and then for various generations of items children outgrow. Sunbelt markets tend to have more children as a share of the overall population compared to coastal and Midwest markets (Figure 7).
Figure 7: Self storage usage and share of population aged 0-19
- Budget: Pure economics also factor into self storage usage. Markets with lower average self storage rents have higher occupancy rates (Figure 8).
Figure 8: Self storage usage and average move-in rent
- Bedrooms: Finally—and perhaps counterintuitively—larger homes are loosely but significantly associated with higher levels of self storage usage (Figure 9). Larger homes likely house larger families and often do not feature basements, and are thus correlated with two other key drivers of self storage usage.
Figure 9: Self storage usage and average single-family home size
Institutionalization and sustainability-related themes may drive further growth
Beyond the four Ds and the four Bs, the ongoing institutionalization of the sector has contributed to higher marketing spend and stronger management that has raised awareness of self storage and improved the customer experience. As of October 2024, the four public self storage REITs owned 30% of the entire U.S. self storage inventory, up from 17% in 2000. Institutional owners (including public REITs) own an estimated 45% of all self storage space in the U.S. (Figure 10). While competition for customers may at times push down move-in rents, well-managed facilities are able to impose ECRI in excess of 10% per year. In addition, more professional management has likely increased penetration rates due to higher marketing spend that has raised awareness.
Figure 10: Self storage ownership over time
Sustainability and climate change may also begin to contribute to growth in the sector. For example, some people may choose to downsize for sustainability reasons while others may be forced to move due to climate change or as the result of an extreme weather event. Increasing concerns about flooding or wildfires may lead people to proactively seek out storage solutions for possessions they might otherwise have kept in basements or attics.
Sustainabilty is also factoring into self storage on the operator side. For example, one large self storage REIT recently reported that it has been installing solar panels on its facilities, which are already contributing to lower utilities costs and higher overall profitability.
The opportunity in self storage:
- The current post-COVID market displacement is stabilizing and may offer an opportunistic entry point.
- Supply risk remains but is reduced as fundamentals have weakened and capital costs have risen.
- Long-term demand drivers such as an aging population (downsizing), homebuying and consumption (decluttering) support demand for self storage.
- Well-managed assets can deliver income gains via ECRI and total returns consistently above the NPI average.
- Fast-growing markets in warmer climates with limited local supply risk and higher self storage use per capita are the most attractive opportunities.