After the Boom: What’s Next for Self Storage in 2026
The first installment in our outlook series explores the sector’s path forward as it enters a new phase of measured growth and resilience.
This year served as a reset for the self storage industry. After the pandemic-fueled development boom left lasting effects, the recent slowdown in new supply has allowed operators to regain footing, with steadier demand and a clearer path toward stabilization. The sector’s resilience continues to stem from life events that transcend economic cycles, even as housing market trends and broader economic conditions shape near-term performance.
One factor poised to influence the future of self storage is the shifting makeup of its customer base. Millennials remain among the largest user groups, but the question now is how today’s young adults will navigate the current economic and social landscape. Increasingly, fewer are reaching traditional milestones that were once considered markers of adulthood.
In 1975, roughly 45 percent of young adults had already moved out of their parents’ home, were working, married and had children, according to a 2025 Census Bureau report. By 2024, that figure had dropped to just 28 percent, a decline underscoring how economic independence has become the primary benchmark in an era of soaring housing, food and living costs. For the self storage sector, this shift carries real implications: If fewer young adults are forming independent households, demand drivers could evolve in unexpected ways.
Back to stability
Industry experts broadly describe 2025 as a year of stabilization, one that followed the post-COVID-19 surge in development and the volatility that came with it. The market’s adjustment brought normalized transaction volumes, steadier capitalization rates and moderate rent growth. In September, the industry logged its first month of incremental rate increases after nearly three years of declines: National advertised asking rents rose 0.9 percent, according to a recent Yardi Matrix self storage national report.
These trends—along with consistent occupancies and a narrowing gap between buyers and sellers—signal a return to a healthier baseline, according to Cameron Paktinat, managing director at DXD Capital.
For some operators, though, 2025 was just a flat year. Charles Byerly, president & CEO of Westport Properties, noted that optimism early on—spurred by expectations of a pro-growth administration and lighter regulation—has since tempered amid macroeconomic hurdles.
“Our demand drivers are consistent in terms of life events,” he said. “But we really need mobility, which is one of our biggest drivers, to be hitting on all cylinders, and right now that’s just not the case.”
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The slowdown in the housing market has also been a major factor as the two sectors are closely linked. High interest rates and broader economic uncertainty have restrained both buyers and sellers so far, but self storage operators are optimistic that this trend will end soon.
“We envision a thawing of this dynamic as interest rates come down and sellers become willing to list their homes once again,” said Matthew Tice, co-CEO of Devon Self Storage and a member of The Inland Real Estate Group of Cos.
In late October, the Federal Open Markets Committee lowered interest rates by 25 basis points for the second time in a row, bringing the baseline rate to 3.75 to 4 percent, the lowest in three years. The move, prompted by rising unemployment and stubborn inflation, was widely anticipated. While financial markets expect another cut in December, Federal Reserve Chair Jerome Powell cautioned that it’s not a “foregone conclusion.”
A slowdown in new construction
Still, for the self storage industry, even modest rate adjustments have ripple effects. Easing borrowing costs could reopen access to capital, but they arrive in a moment when developers are already pulling back.
Elevated construction costs, from materials to land, combined with softening rental rates, have made new projects harder to pencil out. After the pandemic-era boom flooded many markets with new supply, the industry is now shifting toward a more measured, sustainable pace of growth.
This recalibration is both necessary and healthy, according to Tice, who believes the next two years are set to bring below-average deliveries of new units, which will help demand catch up with existing inventory.
Manager of Business Intelligence at Yardi Matrix Doug Ressler echoes that sentiment, noting that many projects were paused in the second quarter of 2025, a clear signal of more cautious development strategies taking hold. Regional dynamics have also played a role. Oversupply continues to weigh on rents in high-growth Sun Belt metros such as Atlanta and Orlando, while markets like New York and Nashville, where new construction has stalled, are seeing the benefits in the form of stabilized pricing.
The bid-ask gap
The slowdown in new construction isn’t just reshaping development. It’s also influencing investment behavior. Transaction activity in the self storage sector has slowed, with only select deals still getting done. Byerly views the deceleration as a necessary correction of the bid-ask gap rather than a setback. “I think it’s healthy for the industry, given the amount of supply that’s come in over the last several years,” he noted.
Even as transaction volumes ease, financing sentiment appears to be stabilizing as lender confidence gradually returns. According to DXD Capital’s 2025 CRE Lender Survey, 94.1 percent of lenders are still targeting acquisitions and 88.2 percent continue to be open to ground-up development. Chris Bailey, managing director at DXD Capital, told Multi-Housing News that stabilized or light-to-medium value-add acquisitions continue to attract the most attention, thanks to their predictable cash flows and easier underwriting.
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Momentum has also been visible on the refinancing front. In the third quarter of 2025, several major portfolios secured fresh capital. In September, a Centerbridge and Merit Hill Capital joint venture obtained $425 million to refinance a 78-property portfolio encompassing 32,000 units and 4.7 million square feet across multiple states. The assets collectively recorded an 18 percent increase in net operating income since 2023.
That same month, Prime Storage landed a $156 million refinancing loan for its NYC Prime Self Storage Portfolio, a three-property collection of Class A assets totaling more than 7,200 units across three boroughs. The financing package was led by Affinius Capital, with 3650 Capital providing an additional $36 million in mezzanine debt.
As capital markets regain some footing, operators are turning their attention to the road ahead. Even though the outlook for 2026 brings renewed optimism, a series of practical hurdles remain.
Challenges going into 2026
Three major challenges stand out as the industry moves into the next year, according to Paktinat. The first is the rising cost of customer acquisition and retention. Even with healthy demand and digital marketing, expenses have climbed significantly. The upside, he noted, is that storage customers tend to stay longer once they move in, a dynamic supported by the flexibility of month-to-month leases.
On the policy front, Paktinat pointed to ongoing conversations about rent regulations. During the pandemic, several states introduced temporary restrictions on rent increases, and those discussions have continued in some markets. That potential legislation could limit operators’ ability to manage pricing in real time. The third challenge is a more conservative capital environment, which is likely to persist into next year. “In 2026, we expect tighter and more granular underwriting,” Paktinat said, adding that the focus will be on making the right deals.
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Byerly echoed the same challenges, while also emphasizing the broader economic headwinds, particularly the ripple effects of tariffs. He warned that the full impact of those costs has yet to be felt. “It’s not sustainable for companies not to pass those costs through to consumers,” he said.
Meanwhile, historically, asking rents remain below recent peaks, closer to 2016–2017 levels, a reflection of how macroeconomic uncertainty continues to weigh on pricing power. “We need clarity on the overall economy, a confident consumer and a housing market that stabilizes in pricing, interest rates and transaction volume. From a storage perspective, that will work itself out if we can figure out the macro side,” Byerly noted.
The industry’s current challenges have, in many ways, set the stage for a more disciplined and deliberate year ahead. After a period of recalibration, operators are entering 2026 with a clearer understanding of what sustainable growth looks like and what it will take to achieve it.
What to expect
Industry leaders agree that self storage has matured into a sector capable of sustaining itself even amid headwinds. Much of that confidence stems from the same enduring factors that have long supported its resilience: life events that continue to drive demand regardless of economic swings.
Tice is convinced that the sector’s durability will hold through 2026, underpinned by strong demographic tailwinds. What will keep growth steady is “the demographic realities of prime age cohorts who continue to seek convenience, mobility and storage solutions that meet evolving lifestyles.”
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Meanwhile, Ressler expects growth to be moderate but resilient, with a continued focus on revenue management, tenant retention and technology-enabled operations. The broader economic climate and the Federal Reserve’s recent rate cuts should further support stabilization.
Still, slower growth isn’t necessarily a drawback. Paktinat sees value in moderation.
“The fundamentals are going to be steady, maybe flat to modest—nothing crazy on the revenue growth side,” he said. “And that’s going to allow us to continue a disciplined approach, adding premium-quality facilities.” Long-term, he remains bullish on the sector’s trajectory.
From a macro perspective, the outlook does remain healthy, with fewer structural risks than many other asset classes.
“I’m very bullish on self storage,” Byerly said. “There’s good long-term run and, as in all industries and economies, there are cycles. In real estate, we know cycles exist and we work through them. Sometimes they last a year, sometimes three to five years. You just don’t know what’s going to happen.”
This year’s industry reset has paved the way for steadier growth in 2026 and beyond, one built on fundamentals rather than frenzy.
