Self storage demand is growing?!

As I fly above Oklahoma, on my way home from the SSA Las Vegas Conference, I find myself pondering the biggest takeaways from this year’s conference. It was great to see many of you, as usual. Below are three of the themes that stuck out to me most:

1. The private buyer still dominates (mostly), and cap rates stabilize (mostly).Despite the noise about REITs and institutions being the big bad buyers, private buyers are still in the driver’s seat—comprising roughly 60% of transactions, according to Marcus & Millichap. Cap rates have steadied around 6.5% on average, ranging from 4.9% (Class A product in a primary market) to 8.0% (Class C product in a tertiary market). The spread between cap rates and 10-yr treasury seems to have stabilized for now.

   
   

2. PANIC JUSTIFIED: CONSUMER DEBT AT ALL TIME HIGHS?!We hear a lot about consumer debt reaching all-time-highs, which is true, however, the debt-to-income ratio is only 61% which is the lowest it’s been in recent history. Consumers still have capacity to spend, and storage demand benefits directly from that resilience. The caveat: tariffs. Companies have absorbed the pain so far, but that’s not sustainable. When costs get passed to consumers, expect some pressure on discretionary spending—including storage. Unless the tariffs get struck down in court, in which case, disregard.

   
   

3. Household usage continues to rise as self-storage continues to become a normal way of life.The newest SSA demand study showed household usage at 13.4% in 2024, up sharply from 11.1% in 2022—continuing an incredible upward trend since Covid. Without that surge, REIT occupancy would be closer to 70% instead of today’s ~90%. Looking forward, 14% of households say they plan to rent a unit in the next 12 months, compared to just 9% two years ago. At the same time, renter behavior is shifting: only 20% expect to rent short-term (<6 months), down from 36% in 2022, implying that renters are ok with renting long term and paying more for it. Demand for 10×10s specifically is growing while other sizes remain flat. Translation: usage is both broadening and deepening, with the 10×10 becoming the clear bread-and-butter product.

   
   

The bottom line: Stability in cap rates, a resilient consumer, and surging demand all point to a market that’s more durable than the headlines may suggest. I still believe that the slowdown in new construction (driven by interest rates and overbuilding in the post-coved era), coupled with a growing population and increased household usage, means that we are due for a boom in the next few years, once interest rates come down and housing mobility picks back up. I could be wrong, but I also could be… right...?

"the Las Vegas strip converted to a giant self storage facility"