A Note from the Founder 02.17.2025

Zachary Urow February 17, 2025

How New Drivers Are Shaping Self-Storage Demand

  • Traditional self-storage demand drivers—Downsizing, Disaster, Divorce, Death, Displacement—have now expanded to include Distribution, reflecting shifts in consumer, and business needs.
  • The rise of e-commerce and small business growth has driven demand for self-storage as a flexible and cost-effective distribution solution, allowing businesses to manage inventory, equipment, and seasonal stock without the overhead costs of traditional warehouse space.
  • Metro areas with high entrepreneurial activity, such as Granbury, TX, and Corvallis, OR, are seeing increased demand for storage units to manage inventory, seasonal stock, and equipment.

Inflation Rate Picked Up in January

  • In January 2025, the U.S. experienced a 0.5% increase in consumer prices, marking the most significant monthly rise since August 2023 and bringing the annual inflation rate to 3%.
  • The 10-year Treasury yield fell more than 10 basis points to 4.531%. The 2-year Treasury yield dipped nearly 6 basis points to 4.307%.
  • Higher inflation is driving up construction and operational costs for self-storage facilities, impacting new development, and expansion strategies across the industry.

Our Thoughts

  • The evolving demand landscape, with Distribution joining traditional self-storage drivers, highlights the need for operators to tailor offerings to both residential and business customers, particularly in high-density and e-commerce-driven markets.
  • With Treasury yields declining, there is potential for more favorable financing conditions, but operators must remain cautious as borrowing costs are still elevated compared to pre-2022 levels.
  • Operators may need to implement strategic pricing adjustments and cost-management practices to maintain financial stability amid rising expenses.