Across the country, self-storage rental rate declines are slowing, with national prices showing signs of stabilization as new development tapers off.

Moderate Declines: National self-storage rental rates fell 1.2% year-over-year in January, an improvement from December’s 2.2% drop and November’s 2.4% decline, according to Yardi Matrix. On a month-over-month basis, rents inched up 0.3% to $16.32 per square foot.

Supply Slows: The percentage of self-storage projects under construction saw a slight decrease in January, continuing a downward trajectory. Over the past year, the national three-year supply pipeline has contracted from 9.1%. Yardi Matrix forecasts a 15% decline in new self-storage supply in 2025, which could further support rental price stabilization.

Top-Performing Markets: Washington, D.C., led the sector, likely benefiting from limited new construction, though potential government layoffs could pose challenges. Tampa remained strong, despite a large number of properties still in lease-up, due in part to demand following hurricanes.

Struggling Markets: Phoenix continues to face pressure as it leads the nation in new self-storage supply, which is keeping rents from rising significantly.

REIT Strategies: Major self-storage REITs have maintained disciplined pricing, prioritizing rent increases for existing tenants rather than offering deep discounts to attract new customers. In contrast, non-REIT operators have been more aggressive with promotional offers.

Key Takeaway

After years of oversupply, self-storage operators may be regaining pricing power, particularly in markets where new construction is slowing. Looking ahead to 2025, performance in the sector will largely depend on demand trends, with extreme weather events potentially driving localized rent spikes.