This post is from Box Pro's "3 Things" newsletter.
A brief newsletter from Box Pro in which we share 3 things in or about the world of self-storage and all the images are AI-generated.

This month's newsletter revolves around what I found to be the most interesting points from CBRE's self-storage market update of late 2024.
1. Is the pendulum swinging the other way?
After leading all asset types as the best performing asset from 2005 to 2021, self-storage fell to second place in 2022 (behind Industrial) and turned negative in 2023. According to the report, performance is expected to remain weak through 2025 amidst flat rent growth and lower street rates, but is poised to recover in 2026 and beyond.
2. Is the worst behind us?
The study looked at investment returns from both an appreciation and income standpoint. According to the report, appreciation returns were the worst in 2023 and declined slightly more in 2024, with 2025 projected to be flat. Moving into 2026, projected returns from appreciation are expected to increase. Note that returns from self-storage income remained steady despite the fluctuations in appreciation returns.
Now for the fears of oversupply. In short, from 2017 to 2021, we saw historic levels of new self storage being brought to market which was met with extremely strong demand, meaning high net absorption and low vacancy. This spurred three more years of heavy development from 2022 to 2024, (which were busy, though not quite at 2017-2021 levels). The only difference this time was the lack of demand. During the last three years, net absorption has fallen and vacancy has increased. As a result, we are now seeing flat rent growth and declining street rates, which is no surprise to anyone. Construction is expected to slow in 2025 amidst continued interest rate concerns and high construction costs.
3. Is there hope?
I think there is a lot of reason to believe the worst is behind us and that self-storage has a bright future. The population in the United States will continue to grow, even if self storage construction slows, as projected. There is good reason to believe that the excess supply created between 2022 and 2024 will be absorbed quickly once interest rate relief comes and home buying/selling activity picks up. Additionally, CBRE is projecting that the household usage rate of self-storage will continue to grow through all this, increasing demand for storage further.
As Warren Buffett has said, "Be fearful when others are greedy, and greedy when others are fearful." Many projects don't pencil right now, given high interest rates, high construction costs, and low street rates. However, if interest rates are lowered and home buying demand is unleashed, there will be a lot of pent-up demand for self storage released. No one has a crystal ball, but if you want to have a new project positioned to take advantage of this pent-up demand, now may be the time to consider planning your next storage investment.
The article is Unpacking self storage: A sector on the move by John Affleck at CBRE.
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