By Paul Moore
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The first article in this series, “Why Investors Love Self-Storage: The Basic Investment Case,” explained why investors have historically been attracted to self-storage: durable demand, fragmented ownership, operational upside, flexible leases, and the ability for skilled operators to create value.
But every investment has a cycle.
The question investors are asking today is not simply:
“Is self-storage a good asset class?”
The better question is:
“Where are we in the self-storage cycle, and what opportunities exist after one of the sector’s most challenging periods?”
From approximately 2022 through 2025, self-storage experienced a significant reset. Higher interest rates, slower home sales, reduced household mobility, and a wave of new self-storage construction pressured occupancy, rental growth, and property values.
The pandemic-era boom was over.
The easy money was gone.
But something interesting happened: the sector did not break.
By 2026, investors were beginning to return, transaction activity was improving, supply growth was slowing, and valuations appeared to be stabilizing.
The opportunity today is not the same opportunity investors saw in 2021.
That may actually be a good thing.
Self-storage was one of the biggest beneficiaries of the pandemic economy.
People moved. They renovated homes. They combined households. They started businesses. They bought more stuff than ever. The guest bedroom became an office, the garage became a gym, and every available closet eventually became a storage negotiation.
Demand surged.
Developers responded.
Unfortunately, the cure for high prices is usually high prices. The success of the sector attracted more capital, more construction, and more competition.
Beginning in 2022, several factors changed at the same time:
The result was predictable: rent growth slowed, concessions increased, and property values declined.
According to Green Street data cited by Nuveen, self-storage values declined for 12 consecutive quarters before reaching a low point in the second quarter of 2025. The sector experienced approximately a 25% decline from peak pricing levels. (Nuveen, Why 2026 Is Pivotal for U.S. Self-Storage)
The good news?
Markets move in cycles.
The bad news?
Investors often remember the upside of a cycle and forget the downside.
Self-storage reminded everyone that even a historically resilient asset class still requires disciplined underwriting.
Source: Green Street data reproduced in Nuveen’s 2026 self-storage outlook.
By 2026, several indicators suggested the self-storage market was moving beyond the trough.
Green Street data showed valuations stabilizing after the prolonged decline. While prices have not returned to pandemic-era peaks, investors appear to have adjusted expectations and become more realistic about future returns.
That is important.
A healthy market does not require buyers to believe every property will deliver extraordinary growth. A healthy market requires buyers and sellers to agree on realistic assumptions.
Transaction activity also began recovering.
CRE Daily reported that self-storage investment activity increased as investors moved beyond the market low point. Large institutional transactions demonstrated renewed confidence in the sector.
Public Storage completed its acquisition of National Storage Affiliates in a transaction valued at approximately $10.5 billion. The deal added more than 1,000 properties and strengthened Public Storage’s position as one of the largest self-storage platforms in the country.
StorageMart also acquired a New York City portfolio of 15 properties totaling approximately 1.3 million square feet for approximately $1 billion.
These transactions don’t signal the end of problems for this asset type. But smart institutional investors rarely deploy billions of dollars into sectors they believe have permanently lost their appeal.
The biggest challenge facing self-storage from 2022 through 2025 was not demand alone.
It was supply.
Too many projects were delivered at the same time that demand growth slowed.
The good news for existing owners is that new construction has become much more difficult.
Higher interest rates, increased construction costs, and weaker rent growth have made many new developments economically challenging.
Green Street data cited by Nuveen showed self-storage supply growth falling to approximately 1.5% in 2025, the lowest level in more than a decade.
This matters because self-storage is a local business.
A national statistic may say supply is reasonable, but a specific property can still struggle if five competitors opened nearby.
Conversely, a property in a smaller market with limited competition may continue performing well even when national headlines sound negative.
The best opportunities often exist where replacement is difficult:
The market does not need another thousand average storage facilities.
It needs fewer, better-located, professionally operated facilities.
One of the most important lessons from the downturn is that there is no such thing as “the self-storage market.”
There are thousands of individual self-storage markets.
Some major Sun Belt markets experienced significant pressure because rapid population growth attracted enormous amounts of new development. More people moved there, but developers also built aggressively.
Growth does not automatically equal opportunity.
Sometimes growth attracts too much competition.
Meanwhile, many tertiary markets performed better than national headlines suggested. These properties benefited from limited new supply, stable local demand, and fewer institutional developers competing for every available parcel.
That does not mean every small market is a winner.
A weak local economy, declining population, or poor property location can still create problems.
But investors should look beyond headlines and analyze the actual trade area surrounding the property.
A self-storage facility does not compete with the entire United States.
It competes with the facility five minutes away.
One of the biggest lessons from this downturn is the difference between operating performance and investment performance.
A property can continue operating successfully while its value declines.
Why?
Interest rates.
When borrowing costs rise and capitalization rates expand, buyers are willing to pay less for the same income stream.
The building did not change.
The mathematics changed.
This is why conservative financing matters.
Investors should understand:
A property with strong occupancy can still face challenges if the loan structure is aggressive.
The opposite is also true.
A well-financed property with a strong operator can survive difficult market conditions and emerge stronger.
The pandemic years created unrealistic expectations in many parts of commercial real estate.
Self-storage was no exception.
During the boom, investors became accustomed to rapid rent increases, easy refinancing, and significant appreciation.
That environment was unlikely to last forever.
At the 2026 National Self-Storage Conference, Extra Space Storage executives discussed the need for investors to reset expectations. Returns approaching the high teens were viewed as unlikely to continue, with more normalized expectations moving closer to the 10%–12% range.
That may sound disappointing.
But disciplined investors should view it differently.
The best investments are not always the ones with the highest projected returns.
They are the ones with the strongest probability of achieving attractive risk-adjusted returns.
A 12% return with conservative assumptions is far more attractive than an 18% projection that requires everything to go perfectly.
The current environment rewards discipline.
Passive investors evaluating self-storage opportunities should focus on several questions.
A strong investment should not require immediate rent growth, falling interest rates, or a sudden surge in home sales.
The business plan should work today.
A recovery should create upside, not rescue the investment.
Look beyond national statistics.
Analyze:
The best operators know their competition block by block.
The last four years provided an excellent stress test.
Ask:
Boom markets reveal sales ability.
Downturns reveal investment ability.
The strongest sponsors focus on controllable improvements:
The goal is not simply to own storage.
The goal is to improve storage.
The 2026 self-storage opportunity is not the same as the 2021 opportunity.
Investors are no longer buying based on unlimited rent growth assumptions and cheap debt.
That is healthy.
The best opportunities today may come from properties acquired at reasonable prices, with conservative financing, in markets where supply is constrained and operators can create measurable value.
At Wellings Capital, we invest in self-storage along with other commercial real estate asset types. The recent cycle reinforced an important principle: the asset class matters, but execution matters more.
Self-storage remains attractive because the fundamental demand drivers remain intact.
People accumulate things.
Businesses need space.
Life creates transitions.
But successful investing requires more than choosing a popular sector.
It requires choosing the right property, the right market, the right operator, and the right price.
Self-storage may have found its floor.
Now investors need to determine which properties have the strongest foundation.
This article is intended for educational purposes only and does not constitute investment, legal, accounting, or tax advice. All investments involve risk, including the potential loss of principal.
Written by
Paul Moore is the Founder of Wellings Capital. After graduating with an engineering degree and an MBA, Paul entered the management development track at Ford Motor Co. He later scaled and sold a staffing firm to a public co. in 1997. Paul began investing in real estate in 1999 to protect and grow his own wealth.
He completed over 100 real estate investments, appeared on HGTV’s House Hunters, and developed a subdivision. After completing three commercial developments, Paul narrowed his focus to commercial real estate in 2011. Paul is married with four children and lives in Central Virginia.
Press: Paul was 2x Finalist for Ernst & Young’s Michigan Entrepreneur and has contributed to BiggerPockets and Fox Business. He is the author of two real estate books: The Perfect Investment and Storing Up Profits. Paul co-hosted a wealth-building podcast called How to Lose Money and he’s been a featured guest on 300+ other podcasts including the BiggerPockets Podcast, The Real Estate Guys, and Entrepreneur on Fire.
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