Americans Need More Self-Storage, But They Don't Want It Too Close Too Them

June 25, 2025 | 8:29 p.m. ET Jarred Schenke, Atlanta

It's not often a developer loses a land use battle to a strip club.

But that's exactly what happened to a builder trying to build a self-storage facility near Atlanta, according to Weissmann Zucker Euster + Katz P.C. shareholder Scott Zucker, who represented the developer.

“The community had a choice between a strip club and a self-storage facility. They picked the strip club,” Zucker said last week at Bisnow's Atlanta State of Storage Assets conference. “So you just never, ever know, with regard to this, what you’re going to get on the development side.”

Unsplash/Beatriz Braga

Localities are pushing back against growth spurt oh self-storage facilities.

The example is indicative of the strong community backlash developers sometimes face when trying to build a self-storage facility. In recent years, communities across the U.S. have placed zoning restrictions on self-storage developments, Inside Self-Storage reported. Many others are considering them.

The crosshairs of those who don't want storage facilities in their backyard is making it increasingly difficult for developers to expand their footprints and adding to projects' underlying costs.

“The biggest issue we're running into is just the approvals. Everybody loves the idea of self-storage, the way they love affordable housing in your neighborhood: not mine,” Coro Realty Advisors President Robert Fransen said onstage at the W Atlanta Downtown.

“That's what we're running into a lot, and it doesn't matter whether it's urban or suburban,” he added. “To us, at least, that has been the biggest impediment to getting these things built. It's not cost. It's not labor. It's not any of that. It's really just, can you get the entitlements?”

The tide against self-storage is coming as the industry is experiencing signs of recovery from a performance slump.

While self-storage REITs reported a 1% decline in net operating income and a 40-basis-point decline in advertised rents year-over-year in the first quarter, the drop in rents is decelerating, according to a Yardi Matrix report. Half of the markets Yardi tracks increased their asking rents during the quarter.

Investment in the sector is also picking up following a slump last year, with self-storage REIT stocks outperforming expectations in the first quarter, according to a recent Newmark report. 

Municipal and county resistance to self-storage facilities is part of the reason for the sector's development slowdown. Some 55M SF is under construction in the U.S., equal to 2.8% of all existing self-storage facilities, according to Yardi Matrix. That is a 10-basis-point dip between April and May, and the deceleration is expected to continue in the coming years.

The development slowdown, though, is a welcome change for self-storage operators, particularly those in markets in the South and Southeast that experienced rampant supply growth in the past decade. The oversupply has caused rents to fall and projects to be abandoned.

“Development has also gotten harder. Communities have made it harder. Costs have made it harder. But because of this, the future looks bright,” Boardwalk Development Group CEO Raj Sheth said. “You get down to 2% of your existing stock, that gives you less competition. Once you’re full, then you raise prices.”

Sheth, whose firm owns and operates 10 self-storage facilities, including Boardwalk Storage facilities in Hiram, Canton and Cumming, said the drop in asking prices is reflective more of an industry shift prompted by the recent consolidation of self-storage REITs. In 2023, Extra Space Storage purchased Life Storage in a $12.7B deal.

The merger led to a pricing war between self-storage operators as Extra Space ramped up efforts to improve its occupancy, Sheth said. But in doing so, Extra Space “completely changed the pricing model.”

Firms now lure customers with low rates. But self-storage customers tend to be sticky and don’t move very often, allowing landlords to push up rents over time.

Bisnow/Brandon Elsasser

Coro Realty's Robert Fransen, Rycon Construction's Cono Passione, self-storage industry vet Donnie Berry, Stuf Storage's Katharine Lau, Storage Building Co.'s Patrick McAllister and Weissman, Zucker Euster + Katz's Scott Zucker.

“It's true in the sense of the street rents, the new customer rents are down. In fact, they're probably down more than 9%, I would argue, in a lot of places,” Fransen said. “But because of the nature of the product, the in-place rents actually are generally significantly higher than the street rents, because you get people in there with teaser rates, and then every four to six months, the rents go up.”

In 2017, more than 9% of U.S. households rented self-storage space, according to the Self Storage Association. By 2024, that figure rose to 11%.

It is a tailwind that will continue as more households begin to move again as the Federal Reserve drops interest rates, as much as 200 basis points by 2027, Sheth said. On top of that, new homes are shrinking in size, prompting the need for households to store their belongings that don’t fit in their homes.

Median new home size in 2024 was more than 2,100 SF, down from 2,400 SF in 2015, according to Bankrate, citing data from Zillow.

“Once you move in [to a self-storage facility], you close that door, you lock it, you don't come back for two years, right?” Sheth said. “It's your stuff, and it's important to you, so you stay and you pay. And so we can increase the rent on you. And so we do.”