The self-storage market has been through a rough stretch. Rental rates are down, occupancies have softened, and operators who were riding high on post-COVID demand are now watching their income statements tell a very different story. But the recovery is not a mystery. There is a clear path back. It just requires a few specific things to happen first.
According to Tom de Jong, Executive Vice President at Colliers and one of the most active self-storage brokers in the country, this is the longest sustained period of rental rate declines he has seen in 16 years specialising in the asset class. Understanding why it happened is the first step to understanding when it ends.
What Actually Caused the Rate Decline
Several demand drivers collapsed at the same time as a flood of new supply hit the market.
During the COVID years, demand for self-storage was unusually strong. People restructured their homes, set up home offices, and cleared space for gym equipment. Rental rates spiked, occupancies hit record highs, and new capital poured into the sector. Developers responded by building aggressively, and that new supply has been delivered from 2023 through 2025.
The problem is that demand weakened at the same time. Higher interest rates slowed the residential housing market, which matters more than most people realise. Roughly 40 to 50 percent of self-storage demand is tied to people buying and selling homes, so when housing transaction volume falls, self-storage demand falls with it. Right as new supply was coming online, one of the sector’s biggest demand engines stalled.
The Markets Feeling It Most
Not every market is struggling equally. The hardest-hit areas are those that absorbed the largest supply increases in a short window: Phoenix, Austin, North Las Vegas, and parts of Florida.
In these markets, the oversupply was not a temporary blip. Some submarkets added 10 to 12 percent new supply over a short period. Even as those properties have worked toward stabilised occupancy, the rent levels they are stabilising at are well below where the market was before construction started. Operators who were charging $1.80 per square foot are now looking at a market reset to $1.20 or $1.30. That difference compounds quickly when multiplied across a full facility.
The markets that have held up are those where it is genuinely difficult to build: Boston, the New York City boroughs, coastal California, and many Northeastern cities. High land costs, long entitlement timelines, and limited available sites kept supply in check, so those markets never experienced the same shock.
The Mechanism That Drives Recovery
Getting back to pre-2023 rates is not a matter of waiting. It requires a specific process to play out, and that process takes time.
The primary tool operators have for recovering income is existing customer rate increases, known in the industry as ECRIs. When a new tenant signs a lease during a period of suppressed street rates, they lock in at that lower level. Over time, through regular increases to the existing customer base, operators can close the gap between achieved rents and where the market should be. The pace of that recovery depends on how quickly occupancy improves and how much pricing power operators can exercise without triggering move-outs.
De Jong also points to another signal worth watching. The major REITs have been advertising street rates well below their in-place rents to defend occupancy. Several markets, including California, following the SB 709 legislation, have seen that practice come under regulatory scrutiny. As that pressure eases and REITs begin raising their advertised rates, it creates more pricing support across the broader market. When the largest operators stop competing on rock-bottom advertised rates, the wider submarket tends to follow.
Why Spring 2026 Is Being Watched Closely
The rental season matters in self-storage for the same reason it matters in most consumer-facing real estate. Demand peaks in spring and summer, and those months will either confirm a recovery or push it out further.
De Jong notes that the last two summers underperformed expectations, with brief upticks in rental activity followed by renewed softening. Heading into spring 2026, the industry is more cautiously optimistic than it has been in recent years. Early indicators suggest the leasing season is off to a better start than in prior years, and recent industry data points to stabilising trends. If that holds through the summer, it would be the first sustained positive signal the sector has seen in this cycle.
The recovery will be gradual and uneven, slowest in the markets that absorbed the most oversupply. But the conditions for a turnaround are identifiable: demand needs to improve, ECRIs need to close the rent gap, and aggressive web-rate pricing needs to keep unwinding. When those three things move together, the market starts to look different.
About Tom de Jong: Tom de Jong is Executive Vice President at Colliers and Founding Principal of the De Jong Self Storage Team. With 19 years at Colliers, a $2B+ transaction record across 32 states, and an SIOR designation, he is one of the most recognised specialists in self-storage brokerage and investment advisory in the United States.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.