As the self-storage market continues its post-pandemic recovery, operators are walking a fine line between boosting rents and keeping tenants in place. According to Marcus & Millichap's 2026 Self-Storage Investment Outlook, asking rents held flat nationally in 2025 after three years of declines, while vacancy rose only modestly to 10.2%, signaling that demand has largely kept pace with new supply.
Many operators, particularly REITs, have leaned on steep rent discounts to lift occupancy, a strategy that helped fill units but pushed stabilized rents roughly 5% below their 2023 peak, the report said. As market conditions firmed late in 2025, the category began to rebound slightly. Still, operators are cautious as aggressive in-place rent increases could trigger higher tenant turnover, undermining gains in occupancy and revenue.
The Public Storage acquisition of National Storage Affiliates illustrates how large operators can manage pricing pressures through robust systems and lower overhead, while private operators, with lower-basis assets and often more moderate discounting, retain flexibility to gradually raise rates while minimizing churn. Secondary and tertiary markets may offer the clearest opportunities for this approach, as lighter REIT presence reduces institutional competition.
Structural demand drivers are supporting the market. Millennials and Gen Z are increasingly adopting storage for lifestyle-driven needs, while downsizing baby boomers continue to fuel demand as the oldest boomers turn 80 in 2026. Rising web search activity in late 2025 and early 2026 suggests tenant interest may translate into future move-ins, particularly in metros where household formation remains strong relative to supply growth.
Unit size dynamics also reinforce retention trends. Larger spaces posted stronger street-rate growth in 2025, likely because tenants storing bulky items or business inventory face higher switching costs, making them less likely to churn. Conversely, smaller units, which developers favored for higher per-square-foot returns, may experience oversupply and greater turnover risk. Meanwhile, longer average tenancies are helping stabilize occupancy and revenue.
Looking ahead, Marcus & Millichap projects that storage fundamentals should continue improving, supported by moderating deliveries and sustained structural demand.
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