One of the most historically overlooked asset classes for CRE investors has been self-storage, despite consistently delivering solid returns, even in times of market turbulence. Over the 20 years from 2000 to 2020, self-storage consistently outperformed all major real estate asset classes, according to the National Association of Real Estate Investment Trusts (NAREIT).
That performance only improved when the pandemic hit, as self-storage experienced a huge surge in demand, due to a sea of changes in living and working environments (remote work, downsizing, migration, etc.). Occupancy surged, with averages reaching as high as 96.5% in Q3 of 2021, up from 91.5% in Q1 2020. Annual revenue for the sector grew by over 13% in the four years following the onset of COVID, and transaction volume exploded to nearly $50 billion between 2020 and 2022. That figure exceeded the transaction volume of the seven years prior, and valuations peaked at approximately $174 per square foot (PSF) nationally in Q1 2023, according to Real Capital Analytics.
As the country slowly recovered from the pandemic, there was a substantial cooling off from the peak asking rents of May and June 2023. The market entered a period of “normalization and moderation” as interest rates rose and new supply came online. Asking rents declined steadily until 2025 and have inched up slowly since then. As of September, national asking rents for the combined mix of units and sizes were up 0.9% year over year, according to Yardi Matrix’s October Market Outlook.
Sales
According to industry publication StorageCafe’s October 2025 report, self-storage sales totaled $755 million nationwide on 9.2 million square feet (MSF) of transactions. The average sale price increased to $123 PSF—a 19% increase over the same period last year. In dense urban and coastal markets, where land is scarce and approvals are notoriously slow, storage properties are trading at prices comparable to prime multifamily assets. Despite higher borrowing costs and tighter credit conditions, self-storage remains a resilient “all-weather” asset class for investors.
California
According to an assessment by RentCafe, high housing costs and a large remote-working population in California create robust demand for self-storage. The state has a total inventory of 233 MSF, with 14% of it built in the last decade. Overall, California offers 6.5 SF of storage per capita, just shy of the 7 SF per capita that is the national benchmark for a balanced market. However, supply is not evenly distributed, with 78% of cities falling below that benchmark.
While national trends show a cooling in self-storage rental rates, California is moving in the opposite direction. Street rates (the rate that a customer is charged when they walk in off the “street” to rent a unit in person at the facility) have increased in 62% of California cities, with 8% of those cities experiencing double-digit gains. The Inland Empire is at the forefront of this trend, with 36 cities reporting rent hikes. Most of these cities have low storage supply per capita, and the area’s 14% population growth over five years has created strong conditions for rent increases. In the neighboring Los Angeles metro, 74 cities reported rising rents. The most significant hikes—mostly double-digit increases—were concentrated in the San Gabriel Valley, east of Downtown LA, where storage supply is often below 2 SF per capita. In general, cities across the LA metro with rent growth are undersupplied.
Street rates also fell in about one-third of California cities, primarily concentrated in the Los Angeles, Inland Empire, Sacramento, San Diego, and San Francisco markets. Most of those submarkets have experienced a decline in population in recent years, which has weakened demand.
Self-Storage Construction in California
To meet demand in undersupplied markets, California is projected to add over 4.9 MSF of self-storage in 2025, trailing only Florida (10 MSF) and Texas (6 MSF) in new construction, driven primarily by positive net migration. The new product will be mainly built in Southern California, with a heavy concentration in the LA metro area and the Inland Empire, both of which are notably undersupplied relative to their populations. About 2% of California’s new supply—roughly 79,000 SF of space—is projected to come from property conversions, often repurposed commercial buildings and shopping malls.
The RentCafe report notes that apartments in Los Angeles average below 700 SF, about 200 SF smaller than the national average, as Los Angeles focuses on building for density due to increased housing demand. The smaller living spaces, in turn, are creating strong demand for self-storage.
Making the Case for Investing in Self-Storage
While self-storage may be the least sexy of the CRE asset classes, there’s no denying its demonstrated track record for investors. And usage of self-storage has only grown in recent years. The percentage of the population using self-storage facilities has also increased over the years. The Self-Storage Association reports that in 2005, only 8.95% of people utilized self-storage. This number has grown to 11.10%, indicating an expanding customer base.
Additionally, the average operating expense ratio for self-storage facilities is far lower than that of other asset classes. One of the primary reasons for the low expense ratios in self-storage facilities is the minimal requirement for on-site staff. Unlike other property types, self-storage facilities don’t require a large workforce for day-to-day operations, reducing labor costs. Additionally, self-storage properties generally have lower maintenance and repair expenses, as the buildings are often simpler in design and construction.
In a recent article, Tyler McKee, development director of DXD Capital, a real estate investment firm specializing in self-storage development, acquisitions, and management, told Globest.com that California is one of the strongest self-storage markets in the U.S. “Developers face significant barriers to entry due to strict zoning laws and a complex entitlement process, which keeps new supply limited,” he said. “This shortage of new projects means many markets remain undersupplied despite growing demand. As a result, operators can maintain premium pricing and stable performance.”
For more information on investing in self-storage, industrial, office, retail, and medical office properties, contact one of Voit Real Estate Services’ trusted commercial real estate advisors.