Is Self Storage Investing in 2025 Still Worth It? Opportunities, Risks, and Winning Strategies

Self storage investments have seen dramatic shifts over the years, and as we enter 2025, the industry is poised for another transformative phase. Whether you’re a seasoned investor or just starting, understanding the market’s evolution and current opportunities is crucial for success.

This guide explores why now is the time to capitalize on self storage investments, the challenges to prepare for, and strategies to position yourself for success.

Drawing on years of experience, we’ll examine the industry's transitions and explain why 2025 presents unique opportunities.

What You’ll Learn

This guide is designed to help you navigate the world of storage investments in 2025. By the end of this article, you’ll understand:

• Why self storage is a resilient and scalable investment option.
• Lessons from the industry's rapid growth and recalibration.
• Opportunities and strategies to leverage the 2025 market dynamics.
• Key steps to prepare for your first storage investment.
• How to maximize returns with SBA loans and operational efficiency.
• Barriers to success and actionable strategies to overcome them.

A Look Back: Why Storage Became the Investment of Choice

Self storage has emerged as a resilient and scalable asset class, drawing investors from diverse backgrounds. Its unique appeal lies in its dual identity as a real estate asset and an operational business.

Over the past two decades, the industry has evolved from a niche market into a powerhouse, weathering economic downturns and adapting to shifting consumer needs.

Investors who treat storage as a business—not just a real estate play—are reaping the rewards of their foresight.

Lessons from the Past: The Bubble and the Transition

Between 2020 and 2022, the self-storage industry experienced significant growth, with occupancy rates reaching approximately 96.5% in the third quarter of 2021, up from 91.5% in the first quarter of 2020. This surge in demand led to increased revenues across the sector. However, this rapid expansion also made some investors overly reliant on favorable market conditions, potentially neglecting essential operational fundamentals.

By 2023, the bubble began to burst. Rising interest rates and a stagnating housing market reduced demand, leading to a significant drop in occupancy and rental rates. This downturn forced the industry to recalibrate.

The stabilization seen in 2024 marked the end of this tumultuous cycle and laid the groundwork for 2025’s transition into a more sustainable growth phase.

The Bull Run Restarts: Opportunities in 2025

As 2025 begins, the storage industry is entering a new growth phase. High interest rates have curtailed new developments, limiting supply. Meanwhile, demand continues to rise, creating an environment ripe for revenue growth.

This dynamic presents an ideal opportunity for investors to acquire assets, improve operations, and position themselves for long-term success.

Key factors driving the 2025 bull run include:

Limited New Supply

High construction costs, cautious lending practices, and a general slowdown in new developments have significantly limited the addition of new facilities.

This supply constraint creates a market imbalance, where growing demand meets reduced availability, resulting in increased profitability for existing assets.

Stable Occupancy Rates

After years of fluctuation and uncertainty, occupancy levels have stabilized at healthy rates. This stability offers investors a predictable revenue stream, making forecasting returns and planning for long-term growth easier.

Facilities with high occupancy levels are better positioned to implement gradual rent increases, further boosting profitability.

Improved Market Dynamics

Sellers are adjusting their expectations to reflect the current market realities. Rising interest rates and the need for liquidity have motivated many sellers to offer more competitive pricing and flexible terms, creating a favorable environment for buyers looking to expand their portfolios.

Preparing for Your First Investment

For new investors, 2025 offers a promising entry point into the self storage market.

To ensure a smooth process, follow these steps:

Build Relationships with Lenders

Partner with a variety of banks, including local banks and credit unions, that specialize in storage financing and can expedite approvals. Establishing trust with knowledgeable lenders ensures you can move quickly when opportunities arise.

Understand Your Financials

Assess your creditworthiness, financial statements, and borrowing capacity early. This clarity will help you identify feasible investment opportunities and address any gaps in advance.

Get Documentation in Order

Gather essential paperwork, including feasibility studies, tax returns, and a solid business plan. These documents demonstrate to lenders and investors that you’re prepared and professional.

Set Realistic Goals

Define your investment objectives based on your financial and operational capabilities. Focus on markets and asset sizes that align with your resources, ensuring you can manage the investment effectively.

Learn from Experts

Tap into educational resources, podcasts, and industry networks. Learning from experienced operators and connecting with peers will provide valuable insights to navigate the complexities of storage investments.

Leveraging Financing Options

Small Business Administration (SBA) loans remain popular for self-storage investors due to their attractive terms and unmatched flexibility.

Here’s why they stand out:

Low Down Payments

One of the most appealing features of SBA loans is the low initial investment requirement. With down payments as little as 10%, investors can allocate their capital strategically, preserving cash for operational needs or other investment opportunities.

Extended Repayment Terms

SBA loans offer repayment terms of up to 25 years. These extended terms significantly reduce monthly payment obligations, making it easier to manage cash flow and focus on growing your investment.

Flexible Underwriting Criteria

Unlike traditional loans, SBA loans consider future projections alongside historical performance. This flexibility enables newer investors or those targeting growth markets to secure financing, even if their current financials are less robust.

Streamlined Approval Process

Working with Preferred Lending Partners (PLPs) like Live Oak Bank simplifies the often complex SBA loan process. These lenders handle approvals in-house, significantly reducing timelines and ensuring a smoother experience.

Support Beyond Financing

Specialized SBA lenders often provide additional resources like market insights and operational guidance. This added support helps investors make informed decisions and maximize the potential of their storage facilities.

For both first-time and seasoned investors, SBA loans represent a reliable and accessible pathway to scaling in the industry. By leveraging these loans, you can reduce upfront risks while positioning yourself for sustainable growth.

However, SBA loans aren’t the only way to finance a storage facility. Conventional financing, private money, and seller financing are also viable options, each with its own opportunities and risks.

While conventional loans may offer competitive rates for strong borrowers, private money can provide flexibility and speed. Seller financing, on the other hand, allows for creative deal structuring that benefits both parties.

Evaluating all financing options ensures you choose the best fit for your investment strategy.

What to Know for 2025: Barriers and Strategies

While the opportunities in 2025 are significant, investors must navigate several challenges to succeed. Here are key insights and strategies:

Market Selection Matters Most

The number one determinant of success in storage is choosing the right market. Oversupplied markets will struggle regardless of operational excellence. Focus on areas with strong demand, limited competition, and growth potential.

Capital is Harder to Access but Still Available

Rising interest rates have made financing more selective. However, specialized lenders continue to support self storage investors. Building strong relationships with experienced lenders can streamline the financing process.

Operational Efficiency is Non-Negotiable

The modern storage customer is digital-first, with over 85% discovering facilities online. To stay competitive, investing in technology and marketing platforms is essential for attracting and retaining customers.

One option is Tenant Inc.’s Hummingbird, a property management software designed specifically for storage operators by storage operators. It streamlines operations, enhances customer experience, and integrates with marketing tools to drive online visibility.

While there are other property management solutions available, we use Tenant Inc. for our facilities because of its industry-focused design and ability to adapt to market demands. Choosing the right software ensures seamless management and maximizes revenue potential in today’s digital landscape.

Focus on Long-Term Growth

Short-term market fluctuations are inevitable, but the long-term outlook for storage remains strong. Adopt a growth mindset, invest in operational improvements, and position your assets for the next market expansion phase.

Why 2025 is the Time to Act

The transitionary period of 2025 offers unique advantages for storage investors, making it the ideal time to take decisive action:

Reduced Competition

Many operators exited the market during the recent downturn, leading to fewer active buyers. This creates a favorable environment for investors, as less competition drives down prices and improves deal availability.

Stabilized Revenue Streams

After years of volatility, occupancy rates and rental income have found a solid floor. This stability allows investors to forecast more accurately and build a consistent cash flow from their investments.

Unprecedented Growth Opportunities

As demand for self-storage facilities continues to recover, investors who act now stand to benefit from rising rents and increasing property valuations.

Limited new developments mean existing facilities will capture the growing demand, amplifying returns for current owners.

Favorable Market Dynamics

High interest rates have slowed new construction, ensuring supply remains constrained while demand grows. This supply-demand imbalance sets the stage for significant rent increases and long-term appreciation in property values.

Strategic Advantage for Smaller Investors

While institutional players focus on major metropolitan markets, secondary and tertiary markets are ripe for smaller investors. These areas offer lower acquisition costs and less competition, providing an excellent entry point into the industry.

By leveraging these advantages, 2025 presents a rare opportunity to build or expand a self storage portfolio with long-term growth in mind.

Final Thoughts

Self storage investments are entering a golden opportunity,, but success requires preparation, adaptability, and strategic decision-making. The opportunities in 2025 are unparalleled, with favorable market dynamics and reduced competition creating the perfect storm for growth.

Now is the time to build relationships with lenders, utilize technology, and focus on your operational advantages. By acting decisively and embracing the evolving market, you can position yourself for long-term success in this lucrative industry.

2025 is go time—seize the moment and set yourself up for a decade of success.