Self-Storage Investing Insights: What We Learned From The 2025 Reset
The self-storage industry experienced a major recalibration in 2025. Learn from a top expert what it will mean moving forward for those who invest.
Author:Alberto ThompsonReviewer:Camilo WoodMay 03, 20260 Shares19 Views
For years, experts in commercial real estate investment have pointed to self-storage as one of the most recession-resistant asset classes. In 2025, that assessment held true. However, 2025 also taught the storage industry that resilience is not the same as immunity.
“The housing market challenges that dominated 2025 — elevated mortgage rates north of %, near 30-year lows in home sale activity, and persistent affordability pressures — had a direct and measurable impact on self-storage fundamentals,” shares Sergio Altomare, Co-Founder and CEO of Hearthfire Holdings. “We saw it in our own portfolio and across the sector: occupancy compression, move-in rent volatility, and longer lease-up timelines for new supply.”
Hearthfire Holdings is a private equity and development firm dedicated to innovative real estate investing with a focus on self-storage. Since launching Hearthfire Holdings with his wife, Corinn, Altomare has grown the firm into a market leader, now managing over $200 million in self-storage assets and achieving consistent returns for investors. Hearthfire’s track record includes nine profitable exits, each delivering an internal rate of return of over 25%.
The Self-storage Market Experienced A Recalibration, Not A Crisis
In 2025, the self-storage sector experienced what Green Streetaptly described as "gridlock housing headwinds." Home sales were stalled, and consumer sentiment was near record lows. As a result, top-of-funnel demand for storage remained thin throughout much of 2025.
“National occupancy reset to approximately 90%, which is healthy by historical standards, but down from peaks we saw during the pandemic,” Altomare explains. “Move-in rents, which had declined for more than two years, finally stabilized and turned modestly positive in late 2025, driven more by easy year-over-year comps and reduced discounting than by surging new demand.”
The lesson investors should take from 2025 is that self-storage is deeply connected to residential real estate activity. Home buying, downsizing, relocations, and household formation are the primary demand drivers in the self-storage industry.
“When housing stalls, storage facilities feel it,” Altomare says. “Not catastrophically and not like office or retail, but meaningfully.”
Self-storage Investing Experienced A Shift Beneath The Surface
What occurred in the self-storage market in 2025 was definitely notable for investors. But just as interesting was how the self-storage sector responded.
“Discussions at the recent New York Self-Storage Investor Forum, which took place in early 2026, pointed out that self-storage is no longer a simple real estate business,” Altomare says. “The quote that resonated most with operators and allocators alike: ‘Self-storage is big data disguised as retail.’”
At scale, the self-storage sector has shifted to keep up with the times. Its focus is now on:
- Revenue management algorithms that adjust pricing daily based on submarket demand.
- Behavioral analytics that predict tenant churn in self-storage facilities and lifetime value.
- Demand modeling that incorporates supply pipelines, economic indicators, and even search trend data.
- Capital structuring that layers preferred equity, private credit, and programmatic joint-venture relationships to make deals pencil in a higher-cost environment.
“The groups that thrived in 2025 were not those with the most square footage of storage space,” Altomare explains. “They were the groups with the deepest operational platforms, data infrastructure, and institutional discipline.”
Decisions By CubeSmart Self Storage And Others Showed Capital Is Reallocating
One of the most important macro trends observed in self-storage in 2025 involved the movement of capital. Specifically, it revealed that capital is not leaving real estate, but rotating within it.
“Over $5.5 trillion of institutional capital is projected to rotate out of office and multifamily and into alternative sectors like self-storage over the next several years,” Altomare says. “We saw early evidence of this throughout 2025, including exit cap rates that stabilized in the 5.5-6.25% range for institutional-quality portfolios, and private equity groups that began actively seeking operating platforms with scale and tech integration.”
Altomare also points out that Real Estate Investment Trusts (REITs) were very active during 2025, with Public Storage (PSA) deploying $945.6 million to acquire 87 facilities with 6.1M net rentable square footage (NRSF), reinforcing institutional appetite for scaled portfolios.
Other REIT activity included:
- CubeSmart executed over $700 million in acquisitions and joint ventures, including full control of 28 lease-up assets in the top 30 Metropolitan Statistical Areas (MSAs).
- Extra Space Storage invested over $500 million in acquisitions and joint venture buyouts while continuing large-scale brand integration.
- National Storage Affiliates (NYSE: NSA) formed a $350 million joint venture focused on value-add acquisitions and professional management.
“These developments point to a critical insight for investors: the next cycle in self-storage will reward platforms, not just properties,” Altomare says. “Buyers are underwriting management capability, revenue optimization systems, and portfolio-level efficiencies — not just bricks and steel.”
The Supply Of Storage Units Went From Flood To Trickle
On the self-storage supply side, the story of 2025 and early 2026 was one of dramatic deceleration. After several years of elevated deliveries, with a notable 5+% annual growth in 2019, new supply pipelines contracted sharply.
To illustrate:
- 2026-2027 supply growth is now projected at just 1.5% annually.
- Construction costs remain 50% above pre-COVID levels.
- Financing for new development is scarce and expensive.
- Entitlement timelines have lengthened due to municipal delays and “not in my backyard” resistance.
“The supply discipline we’re now seeing is creating a healthier foundation for the sector moving forward,” Altomare shares. “Markets that were oversupplied in 2023 and 2024 have largely absorbed that inventory. And operators with stabilized portfolios in balanced markets are now positioned to benefit from pricing power as demand normalizes. The sector has been stress-tested by rising rates, housing gridlock, and a wave of new supply — and it held.”
Alberto Thompson
Author
Alberto Thompson is an acclaimed journalist, sports enthusiast, and economics aficionado renowned for his expertise and trustworthiness. Holding a Bachelor's degree in Journalism and Economics from Columbia University, Alberto brings over 15 years of media experience to his work, delivering insights that are both deep and accurate.
Outside of his professional pursuits, Alberto enjoys exploring the outdoors, indulging in sports, and immersing himself in literature. His dedication to providing informed perspectives and fostering meaningful discourse underscores his passion for journalism, sports, and economics. Alberto Thompson continues to make a significant impact in these fields, leaving an indelible mark through his commitment and expertise.
Camilo Wood
Reviewer
Camilo Wood has over two decades of experience as a writer and journalist, specializing in finance and economics. With a degree in Economics and a background in financial research and analysis, Camilo brings a wealth of knowledge and expertise to his writing.
Throughout his career, Camilo has contributed to numerous publications, covering a wide range of topics such as global economic trends, investment strategies, and market analysis. His articles are recognized for their insightful analysis and clear explanations, making complex financial concepts accessible to readers.
Camilo's experience includes working in roles related to financial reporting, analysis, and commentary, allowing him to provide readers with accurate and trustworthy information. His dedication to journalistic integrity and commitment to delivering high-quality content make him a trusted voice in the fields of finance and journalism.
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