Self-storage is no longer riding the extraordinary demand wave that lifted the sector during the pandemic, but its investment case remains one of the strongest in commercial real estate.
A new DXD Capital report shows that weighted REIT occupancy fell to 91.5 percent in the first quarter of 2026, marking a new cyclical low and dipping below the 92.8 percent level recorded at the end of 2019. The sector had reached a pandemic-era peak of 96.4 percent in the third quarter of 2021, when household moves, space needs and housing-market activity drove unusually strong demand.
That demand picture has since changed. A slower housing market has reduced move-related storage needs, and operators are adjusting to a more normalized leasing environment. Rather than expecting a quick return to peak occupancy, the industry appears to be settling into a new operating period shaped by higher interest rates, more selective consumers and market-by-market performance differences.
Even with softer fundamentals, self-storage continues to compare favorably with other property sectors. DXD reported a distress rate of just 0.2 percent for self-storage assets, far below the 21.2 percent distress rate for office properties and the 6 percent rate for multifamily. That gap underscores why investors continue to view storage as a resilient CRE category, even during a slower cycle.
Supply trends may also help the sector regain balance. Deliveries are expected to decline from 59 million net rentable square feet to 51 million this year, before falling to roughly 38 million by 2028. That projected pullback would bring new development to levels not seen since 2016 and well below the 79.2 million net rentable square feet delivered in 2019.
For owners and operators, the near-term focus is likely to be disciplined pricing, expense control and occupancy management. For investors, the current reset may create opportunities to acquire or develop assets in markets where long-term population growth, limited future supply and professional management can support durable performance.
Self-storage may be past its pandemic peak, but the sector’s low distress, operational flexibility and shrinking construction pipeline suggest it remains one of commercial real estate’s more durable performers.
Source: GlobeSt.