Interior Design Services NAICS 541410

Oct 20, 2025 - Self-Storage REITs Drive Street Rate Growth

• Advertised rates for new customers, also called street rates, increased for both institutional and independent self-storage operators in September, marking the first incremental growth in nearly three years, according to Yardi Matrix. National advertised rates increased 0.9% in September compared to a year earlier. September rate growth was led by aggressive pricing strategies by self-storage REITs, as same-store advertised rates grew by 2.6% year-over-year. Non-REIT operators saw same-store advertised rates rise 0.1% over the same period. The average metro rate for medium (10x10 & 10x15) climate-controlled self-storage units increased by 1.8% year-over-year in September 2025, according to Yardi Matrix. Average metro rates for medium (10x10 & 10x15) non-climate-controlled units rose 0.8% year-over-year. Average annualized same-store street rates – storage rent rates quoted to new customers – for non-climate-controlled units rose 0.5% in September compared to a year earlier; street rates for climate-controlled units rose 1.5%. September rate growth across nearly all of the top 30 metro markets tracked by Yardi Matrix saw stronger growth than in August.
• Home builder confidence in the single-family market improved in October but remained solidly in negative territory, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), rose five points to 37 in October 2025 compared to September's reading of 32. Any HMI reading over 50 indicates that more builders see conditions as good than poor. October's HMI marked the highest reading since April 2025. Builders are cautiously optimistic as the average for a 30-year fixed-rate mortgage dropped to 6.3%, and the Federal Reserve is expected to ease interest rates further later in the year. However, the housing market remains challenging as many would-be buyers stay on the sidelines waiting for lower mortgage rates. New home sales are a key driver of self-storage demand.

• The self-storage sector continues to stabilize after pandemic-era highs, according to a recent report by Cushman & Wakefield. In the first half of 2025, self-storage transaction volume reached $2.8 billion, nearly flat year-over-year but aligned with pre-pandemic norms. In Q2 2025, valuations stood at $159 per square foot, down 12% from their Q1 2023 peak of $174 per square foot (PSF). Cap rates have held steady around 5.8% over the past six quarters, and national occupancy remains strong at about 90%. However, rental rates have moderated, falling to an average of $127 PSF in Q2 2025 from the peak of $134 PSF in Q3 2023. Development has slowed due to elevated costs, tariff risks, and tight debt liquidity, placing more projects on hold. Despite these headwinds, investor interest remains robust, especially in secondary markets and value-add opportunities, with nearly two-thirds of self-storage investors planning to be net buyers through 2026.
• Renters were the sole driver of the rise in household formations in the second quarter of 2025, according to the Census Bureau’s most recent Housing Vacancy Survey (HVS) and the National Association of Home Builders (NAHB). In Q2 2025, the total number of US households increased to 132.5 million, up by 1.2 million compared to 131.3 million in the second quarter of 2024. The increase in new households was entirely driven by renters, amid the lowest homeownership rate since 2019. US homeownership fell to 65% of total households in Q2 2025 and was 4.2 percentage points below the 25-year average of 66.3%. High home prices, elevated mortgage rates, and low inventories have pushed housing affordability to the lowest level in decades. Home sales and homeownership are demand drivers for self-storage services.