Storage Wars: Why NOW Is the Time to Invest

Is self-storage still a smart investment—or did you miss the boat? 

Scott Meyers answers the question on every investor’s mind: Is now the time to jump into self-storage? 

Backed by 20+ years of experience and fresh 2025 market data, Scott breaks down the economic forces driving record demand in self-storage—even amidst uncertainty. 

He dives into supply chain shifts, demographic trends, urbanization, minimalism, and how high interest rates are actually creating a once-in-a-decade land grab opportunity. 

From adaptive reuse projects to market selection and investment timing, Scott reveals why self-storage is outperforming other sectors and how savvy investors can ride the coming wave.

Listen For:

01:57 – Why self-storage thrives in both boom and bust cycles

06:41 – U.S. households using storage hits record high in 2024

15:21 – $3B in 2024 sales: Who's buying self-storage and why

18:49 – Timing the next refinance or exit for max value

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Chapters

• 1:57 Why self-storage thrives in both boom and bust cycles
• 6:41 U.S. households using storage hits record high in 2024
• 15:21 $3B in 2024 sales: Who's buying self-storage and why
• 18:49 Timing the next refinance or exit for max value

Transcript

Announcer (00:03):

This is the Self Storage Podcast with the original Self storage expert, Scott Meyers.

Scott Meyers (00:11):

Hello everyone and welcome back to the Self Storage Podcast. I'm your host at Scott Meyers. And today's focus, well, we're going to be talking about a supply and demand in self storage. And so before you tune out because of what seems to be a very boring episode, well this is the reason why and what determines whether you're going to jump in or not in self storage. This is the most common question, quite honestly, that we're asked. This is the most common question that comes into our website, is now the time to invest in self-storage. When is the best time to invest in self storage? Have I missed the boat? Has the train that left at the station and if so, why are you so bullish on self-storage? Scott and I say if so, because the answer is almost always, yeah, now's the time. Because how many folks, the number one regret from most self storage investors in this industry is it points to their businesses that it should have got in sooner.

(01:03):

Biggest mistake should have got in sooner because here's the deal, self storage is extremely well during the boom times. As we all know, when people, when the economy's going well, people are moving, they're buying houses, they're acquiring things and more stuff, there's a demand for more space to store their stuff, thus a demand for self-storage. Conversely, when we have a downturn, when we see a downturn in the economy, when there is a recession or even a pullback, what we see is that businesses downsize, individuals, downsize folks are moving back in with each other or they're moving back in with a family, moving in with friends. Businesses are putting inventory and furnishings back into storage until things turn back around again. Well, that also necessitates a need for storage. And even more so during a recession, we actually see a boom, which is even greater during a recession in demand for self storage than we do when times are good.

(01:57):

And so we'll talk a little bit more about that at the end, but that's fine. Scott, you're biased. You're in the business, you're in the industry. Of course you're going to say, now's a good time to get into self storage. But like anything, if you stuck around here long enough, the decisions I make mirror the exact same decisions and the process that we utilize. And we're mentoring people in our education business when they're looking to invest in self storage, which is, hey, the stats tell the score, and that's what determines whether you're winning or losing. So we use the statistics and we use a logic to form a very calculated decision as to when it's time to pump the brakes a little bit and when it's time to hit the gas. And so where do we find ourselves right now? Yeah, well stay tuned because that's what we're going to be talking about in today's episode.

(02:41):

So we use a number of data gathering resources to, which allows us to be able to make more informed decisions. We keep our ear to the ground because everything is about timing. No matter what the investment is, including self-storage, whether it's developing from the ground up or an acquisition, we're always looking to the exit. We're always looking at when we're going to sell and how to time the market. Just because of the nature of self storage and the nature of commercial real estate, the valuation hinges on not only the net operating income, which means how much money this facility is producing, subtracting the expenses from that to come up within an OI and net operating income, and then divide that by the all powerful capitalization rate or the cap rate. So depending upon where the interest rates are, determines where the cap rates are at that time, and the lower the interest rate, the lower the cap rate, which means when you divide that into your NOI, that is what produces the greatest or the greater value at that time.

(03:35):

So everything that we do hinges on when we're going to exit and where we feel cap rates are going to be. And so yes, you make money when you buy an investment, and that goes for any, but you realize that when you sell and depending upon the time and the resources involved, determining when and hitting your marks on the sale date, that is what is going to produce the most returns for you and your investment partners. So where we sit in the market right now, we're looking for obviously pockets in the market. And let's talk for a minute about the physical market. We're talking about geographic markets. Where we sit right now in looking at a market to invest in, it still has to have all of the parameters that we look for in terms of a demand. It has to have a low supply index, which means higher demand, a greater demand.

(04:22):

We'd like to see some trends then in the market as well, whether it be a high flying market, a particular market, whether it be a state, city, a locale, several zip codes and a particular area which are doing very, very well. They've got strong leadership, they're drawing in more businesses. It's a business friendly environment, therefore it's producing more tax revenue from a business standpoint, which brings more employees to come in to fill the jobs with these employers, which also raises the tax base. And then a growing community obviously brings a need for storage. So those are the types of things that we're looking for. And we've seen a mass exodus from certain states during Covid into the Sunbelt states. The smile states throughout the country. And so there's been an influx of development and acquisitions and very active markets in the Selfeastern portion of the United States.

(05:11):

And that continues to this day, but it doesn't have to be there. Much of our focus right now is smack dab in the middle of the bread basket of the country. And no, I'm not going to tell you where that is because we're dominating in some of these markets right now when we're buying up and converting many old abandoned warehouses and industrial buildings into sell storage in some of these markets because of some of the fastest growing within the Midwest. Yes, you can smile there as well, but you don't have to be near oceans and mountains and beaches in order to have a thriving and a growing city. So those dynamics that hasn't changed, and again, we utilize store track, we utilize a number of other sources to determine what do the market rates look like, what does the occupancy look like, the supply and the demand, all those factors are involved.

(05:55):

But let's take a step back and let's take a look at the market overall. We've seen an increased usage of self storage as of 2024, approximately 10.2% of US households utilize that self storage, and that's up from 9.3% in that 2019. So we saw a little surge again, since I've, in the 20 years that I've been investing in self storage, it's always hovered right around 10%. We did take a little bit of a dip for a while, but now it's a back up to 10.2%. And we've seen just massive amounts of growth in self storage also because there's been more demand for self storage. So it's one thing when the percentage of households increases, but there's more demand for larger sizes and larger units that fall in behind that figure. So it actually makes it look a little bit bigger than what it truly is when you just look at the percentage.

(06:41):

Well, and so for those of you that are watching on video right now, you can see me smiling as I talk about the industry growth because once again, this is the sector I love. This is why I love it. The self storage market reached at 30.1 billion, yes, with a a market cap in 2024, and it's projected to grow to 51.23 billion by 2030. So I'll just do the math for you. That's a 60% increase in just five years. So that is coming a 60% increase in the next five years. And so for those of you who think that, well, I see the market saturated or I listen to the news and everything sounds bad, how can this be such a bright shining star in such a dark environment right now? Well, first of all, that's your problem. You're listening to the news because they are paid to sell you a bad news.

(07:29):

They won't talk about the market, what's good in the market, especially the corners in which most people aren't looking, which is these metal boxes on concrete slabs, which we've known all along. And so no, you haven't remember the statement that I made earlier in the podcast. The biggest regret, the biggest mistake that most self storage investors make is that they did just that. They listened to the bad news, they listened to the economy, they listened to the naysayers or the own voices in their head that said, how do you know if it's time to go? Well, listen to me, the original self storage expert with over 20 plus years experience in this industry, when I say now is the time to invest in self storage because now is the time to invest in self storage. Alright, still skeptical. Well, no worries. I'm going to give you more stats as to what is driving this demand.

(08:13):

So the number's great. It's not a vanity number, it is a real number. We'll realize this, and we're seeing that happen right now, even as we head into the second quarter of 2025. And some of these factors have been in play for a long time and others are really picking up steam. And one of those is urbanization. We've been seeing this all along. We saw some massive changes in 2020 with Covid, and that is there is an increasing urban population, which is leading to smaller living spaces. So people are coming back into the cities. Cities are growing the cities in the highest demand, still in the smile states and other areas, and people that are moving there many times they are living in an apartment, they are living in a condo or attached unit while they survey the landscape and decide whether they're going to buy a house and where they're going to buy a house.

(09:03):

There's others that are just moving as there's massive amounts of growth and jobs in these markets. And these are the young workforce. And by nature, they don't have a large budget. They're just beginning their careers. And so they are living in these smaller urban spaces. And well, as we've seen with the generations that have come beyond the boomers, which were considered the largest users of self storage in the past 20 to 30 years, well now we're seeing the younger generations. They actually prefer some of these smaller spaces. They want to be more flexible. They're not really ready for a house yet, but they like to have adventures and adventures come with kayaks and camping gear and bicycles and all types of other toys and things that don't fit in these smaller apartments and condos. And so where do they go? You guessed it. Go into storage.

(09:47):

And although you may not see this in your teenagers bedroom, there are studies that have shown and we've seen that have been commissioned in our industry that there are trends in decluttering and minimalism. Yes, it's true. Who would've ever thought that Americans were actually into a decluttering? Because that is the antithesis of self-storage and we would think would create that less demand. But here's the deal. Folks are decluttering their homes and they want to have more living space or at least not to look as crowded or as busy. And so they don't want to get rid of these things. The clutter is still valuable. It's not trash. And so the clutter goes to self storage. It doesn't go into the dumpster, it's just out of sight and allows for more space for folks that are trying to live a more minimalist lifestyle. So couple some of those new and more recent trends with the underlying factors for demand that have always been present in self storage.

(10:38):

We've been in the trauma and transition business when people are moving death, divorce, bankruptcy, you name it, displacement if their house is flooded, all the types of things that people utilize storage for, which has always been there. And we're seeing now an increase in demand for self-storage and a supply chain that has been suppressed over the past several years with high interest rates creating the perfect storm for those of us that already have self-storage. And those of us that are looking forward and are converting old industrial buildings, repurposing them, adaptive reuse as we call them, into cell storage and or ground up development. And some of you're saying, yeah, right, Scott, I've seen it. I've seen the cranes. I've seen cell storage facilities being built in my town sometimes right next door or right across the street from other facilities. It looks like the market is saturated.

(11:21):

How are we going to be able to keep up with this and certainly doesn't look like a good time to get into this industry when there's so much competition? Well, oh, contraire loan fair because let's face it that developers like myself, this isn't a hobby. This isn't something that we're just going to throw out a facility and build it and hope that they will come because what we would be doing is throwing out and testing with five, nine, $20 million just to hope that it fills up and that it actually cash flows and that the rates aren't so low in the market because of all the competition that we actually don't make it. This is all based upon the facts and the stats in the industry. This is a simple, predictable business model. Don't confuse that with an easy business, but it's a simple predictable business model that has a couple hundred steps in order to get to that place where you have a successful self-storage facility.

(12:14):

The good news is on the market side, when we take a look at the stats and we look at the supply index and we look at the rental rates in a market, we can reverse engineer that with our construction costs and determine with a fair amount of accuracy whether it makes sense to buy that old vacant dark retail big box and convert it to self storage or develop from the ground up or to buy this existing facility and then rehab it and expand it. We have the ability to do that and to be able to hit our marks pretty concisely. And we've been doing this for over 20 years, so we've got a little more data in history behind us, but that's what we also help people to do. And people come to us so that we can help them to really dial in and then give them the green light that many times they need to determine whether it's time to go forward with a project or not.

(12:57):

And we are active developing and we are actively developing right now as well as converting industrial billings into a self-storage. We've got a busy season right now. We are in a busy season right now. One of the busiest that we've had in a long time, and we're not alone as of August of 2024, there were 3048 cell storage properties in various stages of development nationwide with 837 under construction. And they may sound a lot like a lot. And despite a surge in demand, new construction has not kept pace, which has led to supply shortages in certain markets. And we are seeing that real time as well. We're operating in, I think we're in almost 28 states now, and we're seeing that rental rates are going back up again and significantly because, well, this last time I checked, this still is a capitalist economy. And when supply is low, demand is high.

(13:49):

And those of us in the industry that are supplying a limited supply of social storage units, we have the ability to raise rates and we have the ability to raise rates often and to match the demand. And as much as self storage is that needed in these markets and really needed in any market, and I would say in society, because people need a place to store things instead of having it strewn all across their decks and their patios of apartments and cluttering the municipality or cluttering up your neighborhood, there are zoning laws and community opposition that hinders new cell stores and developments and is limited supply and expansion over the several years. And so as much as we don't welcome those challenges, we do know how to get around them. We know how to face them head on, and we know how to show that we are very good, quiet, friendly neighbors in these communities, and we've been very successful.

(14:38):

It is one of our strong suits and one of our superpowers to be able to step into a zoning meeting, to step into and talk with the zoning boards and the communities, the cities, the city county council members, and show them not only how we operate and what we're going to build, but how we are a quiet neighbor that provides jobs and taxes to their community with a low drag on resources, by the way. And so for those of you looking to get into the business, this also creates opportunities for existing self-storage facilities. I mean, anytime there's a rising demand and you can step into a market and step into, well, the quickest way to get into the business is to buy an existing facility to get into the business and do what you can to dip your net in the river that continues to flow with all kinds of fish like everyone else.

(15:21):

We've seen a high transaction volume in our industry in 2024 as well, 822 properties sold, totaling $3 billion indicating just quite a robust investor interest. And that is all across the board from individuals mom and pops buying other mom and pops individuals buying these facilities as well as institutional investors, gobbling up portfolios all across the board investor activity in both multi operators and real estate investment trusts have been very active, each representing over 40% of total transaction volume in the second half of 2024 alone. And most investors, including myself, the members of our mastermind and those that we teach and our mentoring programs are value add investors. We're targeting underperforming facilities for renovations and operational improvements to meet the rising demand and taking these, oh gosh, these Cinderella facilities and really turning 'em into the bells of the ball and maximizing the NOI, expanding where we can, taking 'em from a Class C to a Class B or doing anything we can to rise up the food chain to make them more attractive to our clients who will pay more.

(16:24):

And then also eventually, as we said, when we exit to be more attractive to the bigger fish who may want to purchase our facilities down the road. And that goes the same for the construction side, which I include conversion opportunities as well, the repurposing of warehouses into self storage. Some companies even having a huge appetite like Go storage, sell storage. And they expanded significantly in 2024, adding 17 net locations across seven states totaling over 1.1 million net rentable square feet themselves. And that's just one example. And we're also seeing in the emerging markets of the Sunbelt regions, the SMILE states, they continue to attract migration, a lot of folks coming from the north. And that just highlights these underserved markets despite oversupply concerns and other am we're seeing this in emerging markets as well. The Sunbelt regions, the SMILE states continue to attract folks that are migrating from the northern states highlighting these underserved markets despite the oversupply concerns in other areas of our economy and other areas of the market.

(17:20):

And on our end, we've got one development project that we are engaged in right now, but we have seven adaptive reuse projects where we're converting these existing buildings such as former medical offices, other warehouses, industrial buildings into self storage facilities to meet the demand without the new construction of the shell, which allows us to come to markets even faster. It's been our bread and butter for a while. It's my favorite thing to do because, well, I'm a junker at heart first of all, but if we start with a building in place, then we don't have to go through all those hoops in the beginning with these cities and the municipalities. And if we've got a shell, then all we have to do is maybe do a little work on that shell and then build out the inside. Well, it's much quicker to be able to come to market and to be able to put our flags up and to turn that sign on so we could do a deeper dive.

(18:06):

And I could probably list at least another half a dozen stats in each one of these categories to convince you that now is the time. But I believe that is enough. You can certainly do your own research. You don't have to take my word for it, but all you need to do is to follow success. And if you look at the successful folks in self storage, our organization being one of them and highlighted more than any others, success leaves clues. And you'll see that we are very active in the market right now as we have been over the past 20 years, but especially right now. And why is that? Is there any secret behind this? Well, no, I just revealed it to you at the beginning. It's because what we're building right now, what we're buying right now, we're converting right now. We know that as interest rates come down, the cap rates will come down.

(18:49):

And that will put us in a position to either refinance at the optimal time once we have optimized these facilities, or will allow us to be able to exit and sell at maximum value to the bigger fish that may come along and to purchase the facilities that we have built and or assembled into a portfolio that is very attractive to the larger players out there. And also to answer the big question that we started with is now the time to jump in. Well only you know that, but I would just leave this question with you, if not now, then when I view this as one of the biggest land grabs in my lifetime, and when I say land grab, that's a cliche that you may have heard before, which means that we're going out and we're buying land in some cases, but we're going out and buying self storage.

(19:27):

We're developing, and we're doing it at scale and doing it as quickly as possible because there is a massive undersupply of self storage. And we know where interest rates are now, which are at some of the highest that they've been, and they're only going down. And so when they come down to the bottom of that bell curve, that is the time that we're going to be refinancing and exiting. There you have it. There's the business model in a nutshell right there. Now, to connect the dots, if this is something that you're interested in taking a step further, head on over to self storage investing.com. This is what we do. We teach people how to do this. And for those that are already in self storage, maybe you got one or two facilities under your belt and you're looking to grow and scale to take advantage, and maybe you've just been sitting on your facility for a little while and maybe a little skittish on yourself as to the timing of the market.

(20:09):

Well, I'm here to tell you it's time to dust off that business plan because I would bet that it has some more aggressive growth goals behind it. And if that's you, if you're looking to grow and scale, and if you're not already in our Self storage Mastermind, then you need to head on over to self storage investing.com and check out the tab on our mastermind and become a member of the largest community of rock stars and self storage that are growing and scaling and sharing resources like deals, joint venture capital, and the best business practices by the best investors on the planet. So with that gang, this is Scott Meyers signing off with another episode of the Self Storage Podcast. Look forward to seeing you on the next Take care.

Announcer (20:50):

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