Advertised rates in the self-storage sector remained under pressure through September 2026, with pricing trends and industry feedback pointing to softening demand in the third quarter, according to the October 2026 Yardi Matrix Self-Storage National Report.
Drawing on data from 2,324 self-storage properties, Yardi found that national advertised rates slipped 1.8% year-over-year in September. While year-over-year advertised rate performance improved from August in half of the top 30 metros tracked by Yardi, annual rate growth remained limited. Non-climate-controlled rates increased only in New York City and Salt Lake City, and climate-controlled rates rose only in Austin, Texas and New York.
Easing Supply Pressures Yet to Impact Rates
Supply pressures eased in most of the top 30 metros in September, with the trailing three-year delivery share declining year-over-year in 21 markets. However, “slower deliveries have yet to translate into meaningful advertised rate improvement due to lease-up properties reportedly taking longer to reach stabilization,” according to the Yardi report.
Nationwide, the new-supply pipeline continues to contract gradually. Approximately 43.8 million net rentable square feet were under construction at the end of September, representing 2.1% of existing inventory, according to Yardi. Of the top 30 metros, only two showed an increase in under-construction supply month over month in September—San Diego and Washington, D.C. All others declined or remained flat.
The sector slowdown marks a notable turnaround from just a few years ago, when a hot housing market drove demand. High housing costs at the time led many buyers to opt for smaller homes and rely on storage space for regularly used items that didn’t fit in their new home, such as recreational equipment.
REIT Operators’ Rate Reductions Steeper Than Non-REITs
Self-storage REITs continued to reduce advertised rates more aggressively than non-REIT competitors. REIT asking rates fell 3.3% year-over-year in September, compared with a 1.0% decline for non-REITs, per the Yardi report.
Nicholas Malagisi, SIOR, managing director of Storage Realty Advisors based in Buffalo, New York, reports that occupancies among the top self-storage REIT operators dropped nationally from 94-96% to 88-90%, leading them to “buy occupancy” through steep discounts and promotional rents for new users. “This discounting led to no or negative NOI in recent years,” says Malagisi. “In select markets, and for select properties and sizes, some operators are beginning to diminish their promotional rents, and larger operators are seeing positive NOI growth,” he adds.
Rental Growth Is Top Concern
Adding to the pressure is the Federal Reserve’s Sept. 16 quarter-point interest rate hike and signaling that another may come by year-end. While the rate increase hits hardest those with loans coming due and needing to refinance, an interest rate impact survey the Self-Storage Association (SSA) conducted the week after the Fed’s action shows that, overall, industry members are focused on the bigger picture.
For owner-operators, higher rates mean slower home sales, tighter consumer budgets and heavier competitor discounting, adding further pressure. Survey respondents cited rental rate growth as their top concern, followed by occupancy. Yet 63% of survey respondents expect industry conditions to be the same or better a year from now.
Owner-Operator Options in the Changing Market
Ben Vestal, CEO of Argus Self-Storage Advisors in Greenwood Village, Colorado, sees the self-storage market at a possible crossroads, with the window closing for owner-operators to decide whether to stay the course and hold their property for the long haul or move on from the sector. For those who think they want to remain in the market long-term, Vestal advises them to ask themselves the following questions:
- Are you willing to hold the property for five years or more?
- Do you have solid financing in place for a contractual period of at least three to five years?
- Do you have liquid resources to cover debt service if revenues decline 10% to 20%?
- Are you among the five most competitive properties in your three-mile submarket?
- Can your submarket absorb a new competitor?
“If you cannot answer ‘yes’ to these questions, then you will likely have a problem holding the property for a long period,” advises Vestal. “If you answered ‘no’ to more than one of the questions, you consider selling and moving on from the self-storage sector.”
For those thinking about retiring, looking to lower their risk, seeking more liquidity or worried about the submarket or the broader economy, Vestal says now may be the right time to sell. “Factors to consider include current market prices and the rise in cap rates, which currently range from 5.75 to 8.5, depending on the market and location of the property,” he adds.
“Serious buyers today are still active and well capitalized, knowledgeable about self-storage valuations and, for the foreseeable future, are only looking for projects that are priced correctly,” says Vestal. “If you expect to sell in today’s marketplace, you must be realistic on your pricing, be prepared to move quickly and be emotionally ready to recognize the market as it is.”
Vestal cautions against a third strategy: denial. “This is often a popular choice when presented with rather stark and limited options,” Vestal says. “However, the other two options give you some ability to protect the fruits of your labor and investment and are very likely to improve your future options.”
Expect Market Normalization, Not a Rapid Rebound, to Vary by Location
“Self-storage appears to be moving toward a better supply-demand balance, but we view the next several years as a normalization rather than a rapid rebound,” says Doug Ressler, manager of business intelligence for Yardi Matrix. “Construction is slowing nationally, which removes an important headwind, but softer demand and the time required for recently delivered properties to lease up continue to pressure rates,” adds Ressler.
Ressler continues: “If housing activity and household mobility strengthen as supply growth moderates, the sector should be positioned for better occupancy and, ultimately, renewed pricing power. However, timing will vary substantially by market. Markets with limited new supply and stronger population, housing and multifamily fundamentals should recover sooner, while heavily supplied Sun Belt markets could take longer to rebalance.”
“Self-storage is here to stay,” says Malagisi. “One in nine households in America have a self-storage user, with the national average of self-storage use now somewhere between six and seven square feet per capita,” continues Malagisi. “Usage has moved beyond the original ‘three Ds’—death, divorce and displacement, making it a strong investment category.”
