Self-Storage Supply Slows as Investment Activity Rebounds

The self-storage market is moving toward a potential stabilization as new supply slows and investment activity rebounds. Marcus & Millichap’s 2H 2026 National Self-Storage Report forecasts 53M SF of completions this year, expanding total inventory by 2.2%. That would represent the sector’s smallest delivery slate since 2016.

Fundamentals remain mixed. Marcus & Millichap expects average asking rents to fall 0.8% year-over-year to $1.18 PSF in 2026, extending declines to four consecutive years. Vacancy, however, is forecast to decrease 20 basis points to 10% by year-end. The improvement primarily reflects stronger tenant retention rather than a major increase in new demand.

Supply Pressure Finally Eases

Development has started retreating from the elevated levels that pressured self-storage rents. Developers completed nearly 27.8M SF during 1H 2026, the lowest first-half total since 2014. Nationwide inventory expanded 1.1% from year-end 2025, according to Marcus & Millichap.

Twenty-three of 38 major markets recorded fewer openings than during the comparable 2025 period. Another 25.2M SF is expected during 2H 2026.

The pipeline remains concentrated in growth markets. Phoenix, Houston, Southeast Florida, Tampa-St. Petersburg, Orlando, and Dallas-Fort Worth are expected to lead second-half development. Marcus & Millichap’s construction chart shows the Northeast holds 29.7% of the 54.7M SF currently underway nationally.

The Details

The slowdown in construction has yet to produce a broad rent recovery. Average asking rents ended June approximately 11% below their 2022 peak, according to Marcus & Millichap. Stabilized rents, however, were within 0.5% of their recent high.

That gap suggests newer properties remain a major source of pricing pressure. Recently delivered facilities still need tenants, forcing operators to compete on street rates while stabilized properties retain stronger pricing.

The impact is particularly visible across the Sun Belt, where development has been concentrated. Marcus & Millichap expects supply-constrained Chicago, Los Angeles, Minneapolis-St. Paul, and Northern New Jersey to record rent growth in 2026. Nationwide rents are forecast to remain about 12% below their 2022 pandemic-era peak.

Self-Storage Investment Rebounds

Investors are returning even before operating fundamentals fully recover. Self-storage transaction counts increased nearly 20% year-over-year through June, while deal volume jumped almost 50%, according to Marcus & Millichap. Trading reached its highest level since 2022.

Activity nevertheless remains almost 30% below the 2022 peak. The gap is especially pronounced among larger transactions. Trades exceeding $20M remain 65% below 2022 levels.

Deals between $1M and $10M performed considerably better. That tranche declined only 20% from 2022 and represented nearly 80% of transactions during the 12 months through June.

The Mountain region led the rebound with a 75% annual increase in transactions. The South remained the largest region, accounting for 32% of trades and recording a 30% increase in activity.

Why It Matters

Self-storage is working through two overlapping adjustments. Operators need the development pipeline to shrink, while investors need property values and financing conditions to settle enough for transactions to pencil.

Both are beginning to happen, although slowly. Marcus & Millichap reports that the sector’s average cap rate reached 6.59%. Average pricing per SF is now roughly 20% below its 2022 spike.

Financing is also becoming more diversified. Banks and credit unions provided roughly 70% of self-storage loan volume in 2023. Their share has fallen closer to half through 2026, with debt funds, government sources, and CMBS filling more of the gap.

Credit performance remains strong on the surface. Securitized self-storage delinquency stood at only 0.05% in July 2026, according to the report.

Yet nearly 30% of outstanding securitized balances are on servicer watchlists. Many loans originated between 2021 and 2024 carried cap rates in the mid-5% range. Those maturities now face reduced valuation cushions and fewer extension options.

The operational side is changing too. The three largest self-storage REITs expanded their combined managed portfolios at a 14.7% annualized rate from 2023 through 2025. By June 2026, they managed 3,224 facilities. That growth is bringing institutional pricing and management deeper into secondary and tertiary markets.

What’s Next

Demand remains the biggest variable for the self-storage market. Household formation increased only about 0.4% year-over-year through June, roughly half the prior decade’s average, according to Marcus & Millichap.

That weakness matters because storage demand often follows moves, household formation, downsizing, and other life changes. As of 2025, 60% of adults ages 18 to 24 lived with their parents. The share was 20% among those ages 25 to 34.

A future increase in household mobility could release pent-up storage demand. Until then, slowing development provides the clearest path toward stronger fundamentals.

Marcus & Millichap expects vacancy to reach 10% by year-end 2026. With deliveries tapering and more distressed maturities potentially pushing properties to market through 2027, investors could see more acquisition opportunities before rents fully recover.