Self-Storage Projects Could Slow Down to 2% by 2027

US self-storage development activity has slowed down drastically, with 2024 full-year construction starts expected to be down 20% compared to 2023, per GlobeSt.

By The Numbers

This slowdown is already evident in the under-construction pipeline, which contracted 1.8% in Q4. Over the past year, the pipeline shrank by 6.7% after peaking in December 2023. 

Yardi Matrix projects that most of the under-construction inventory will be completed by the end of 2025, indicating less near-term development activity.

Construction times are also increasing. The average time to complete self-storage projects, which peaked in mid-2023 and slowed down into mid-2024, began to take longer again in 2H24. Projects completed in Q4 spent an average of 413 days under construction.

Slower Growth

The planned self-storage pipeline has also cooled down. After enjoying rapid growth in 2022 and 2023, the pipeline remained flat for most of 2024. In December, developments slipped 1.8% QoQ, but were still up 4.4% YoY.

This indicates that the initial boom in post-pandemic self-storage development has waned. Longer planning times—self-storage projects starting in Q4 averaged 583 days in the planning phase—also reveal the development process is growing complex, with developers taking longer to secure the necessary entitlements and approvals.

Shrinking Pipeline

The prospective self-storage pipeline, which tracks potential future projects, continued to shrink, falling 10.2% QoQ and 25.3% YoY. 

This follows an earlier expansion in 2022 and 2023 and suggests fewer developers are pursuing new sites or navigating the often difficult entitlement processes required to move projects forward.

As financial constraints become more significant, fewer sponsors will be willing to take on the risks associated with new development.

Deferred and Abandoned

Deferred and abandoned projects remain a challenge in the self-storage sector, although they have calmed down from mid-2024’s highs.

As of Q4, deferred net rentable square footage (NRSF) for markets open at least 24 months stood at 4.07M, down 2.5% from Q3 and 7.6% YoY.

However, the overall number of deferred projects remains high, with many projects facing delays or cancellations due to rising costs and other pressures.

Sector Outlook

US self-storage development is expected to keep slowing down, with new projects likely to shrink to just 2% of total inventory by 2027. The industry faces many headwinds, including rising construction costs, delays in planning and construction, and tighter financial conditions. 

While the demand for self-storage remains relatively stable, these factors will likely result in slower development over the next several years. Developers will need to navigate these challenges carefully, as the market adjusts to a slower growth trajectory.