Self Storage Services NAICS 531130

Jul 20, 2025 - Housing Starts Decline

• Single-family housing starts decreased 4.6% in June 2025 from May, marking the weakest starts activity since June 2024, according to the US Census Bureau. Permitting activity for single-family housing – an indicator of future homebuilding activity – rose 0.2% in June compared to the month before. High interest rates, economic uncertainty, and an oversupply of unsold new homes are weighing on the US homebuilding market, according to Reuters. The inventory of new homes waiting to be sold is the highest since 2007. Some economists suggest that lower interest rates would be a lifeline for the sluggish housing market, but the Federal Reserve is concerned that lowering rates could exacerbate the inflationary effects of the Trump administration’s tariff policies. Housing starts and building permitting activity are indicators of future self-storage services demand.
• The average metro rate for medium (10x10 & 10x15) climate-controlled self-storage units increased by 0.7% year-over-year in June 2025, according to Yardi Matrix. Average metro rates for medium (10x10 & 10x15) non-climate-controlled units dropped 0.2% year-over-year. Average annualized same-store street rates – storage rent rates quoted to new customers – for non-climate-controlled units fell 0.4% in June compared to a year earlier; street rates for climate-controlled units also declined by 0.4%. Street rates continued to be pressured by soft demand that primarily stems from the weakness of the US housing market.

• High mortgage rates and the resulting weak housing market remain a headwind for self-storage demand, but there are signs the market may be on the cusp of recovery, according to a recent report by self-storage developer and investing firm DXD Capital and reporting by Inside Self-Storage. The report suggests that demand for self-storage services has returned to baseline and that new supply is slowing. DXD expects delivery of new self-storage supply to see annual declines over the next five years. The report also noted that some self-storage REITs, including CubeSmart, Extra Space Storage, and Public Storage, have seen recent upticks in move-in rates, digital traffic, and customer inquiries.
• Some of the top US-based self-storage real estate investment trusts (REITs) saw net operating income and occupancy soften in the first quarter of 2025. CubeSmart’s same-store net operating income (NOI) fell 0.8% year-over-year in Q1 2025, and occupancy dropped to 89.2% from Q1 2024’s 90.4%. Extra Space Storage’s same-store NOI was down 1.2% from the first quarter of 2024, but occupancy rose to 93.4% from 92.4% over the same period. Public Storage’s same-store NOI was flat year-over-year in the first quarter, and occupancy fell from 92.1% in Q1 2024 to 91.5%. National Storage Affiliates Trust’s NOI dropped 5.7% in Q1 2025, and occupancy fell to 83.9% from 85.8% in Q1 2024. In speaking to first-quarter results, the President and CEO of National Storage Affiliates Trust said, “Despite increased economic uncertainty, we remain positive on the medium-term outlook for the self storage sector, and NSA specifically.”