Public Storage vs. Extra Space: The $10B Strategy Battle

THE SELF STORAGE REPORT — FULL TRANSCRIPT Guest: Noah Starr (Co-Founder & CEO, TractIQ) Host: Chris Berg (Abernathey Development — "The AI Storage Guy") Topic: Reading the Q1 2026 REIT earnings — Public Storage's "PS 4.0" platform + the ~$10B NSA acquisition, the Public Storage–Welltower data JV, what it means for secondary/tertiary markets, the Sun Belt oversupply picture (web-rate data), and the Public Storage (platform/tech) vs. Extra Space (in-house, 3PM + bridge lending) operating-philosophy contrast. Closes with the Storage Demand Score. Note: This is the "Public Storage vs. Extra Space: the $10B Strategy Battle" episode. Aired ~first week of May 2026 (the episode BEFORE Brett Henry / Trojan Storage on 5/12). Distinct from Noah's June "1000x Your Deal Flow" AI-connector episode. Data cited: PSA same-store revenue +2.6%, Extra Space +1.7%; web/street rate YoY — PSA −3.8%, Extra −7%, CubeSmart −6.1%; Sun Belt PSA rates down ~15% blended vs. Midwest/coastal; PSA $600M+ under development. TractIQ team: Ethan, Marina. Upcoming TractIQ webinar May 12 (John Lindsay to present a new portfolio listing, underwritten live). Recorded: early May 2026 Source: original recording transcript (speaker-labeled) ======================================================== Chris Berg (00:54): Well, Public Storage and Extra Space have now released their Q1 2026 earnings. The big question is: how does that matter to you, and why should you care? We've got the perfect guest to talk about that — the CEO of TractIQ, Noah Starr. I'm Chris Berg with Abernathey Development. Noah, great to see you and welcome back, my friend. Noah Starr (01:13): Chris, great to be here — you're awesome. I'm excited to chat earnings and storage and data, all of it. It's going to be an interesting conversation. Chris Berg (01:23): Before we get into the earnings, I want to say thank you, because what you're doing for the industry has been astounding — from the CMBS work, you've got a big release coming in the next couple of weeks. It's been fun to watch. The Wall Street Journal's now calling: "Hey Noah, what's happening?" So kudos to you. Noah Starr (01:39): I appreciate it — it's a team effort from Ethan, Marina, to our entire team, and the stuff compounds. We've been talking about this for years and we're not even close to finished. My hope is we'll continue to make progress as an industry to make better decisions. Chris Berg (02:05): Don't you have a bust of Warren Buffett on your desk? Noah Starr (02:10): And Charlie Munger. But I'm at a WeWork at the moment — they're portable, but I don't bring them with me, because that would be crazy. Chris Berg (02:17): The reason I ask: you say "we're just compounding, Chris." That's what Warren Buffett would say. So let's start there. Noah Starr (02:27): Unfortunately, I'm not going to Omaha this year. I've gone a number of times, but that's this weekend. Lots of hopefully good advice from the new CEO of Berkshire, and I'm sure Warren will make an appearance. Chris Berg (02:38): Nice little drop — I didn't know that, I'll check it out this weekend. All right, let's jump into these earnings. What do you think is the single most important thing that jumped out that people should know? Noah Starr (02:53): What's interesting is Public Storage is leaning into their "PS 4.0" — the new operating portfolio and platform — buying NSA and integrating all of that. They talked a lot about what that will do for future earnings. We've seen it the last number of quarters: they've been running stores a lot more profitably. Even if occupancy and revenue are close to flat, they've made meaningful drops in expenses, which boosted NOI. Compare that to Extra Space, where you haven't seen that same level of lift. So the NSA acquisition and PS 4.0 trying to make a splash — that's how we'll probably remember these earnings compared to other quarters. Chris Berg (03:49): How do you translate that for the operator or investor watching — what does it mean for them? Noah Starr (03:56): We've talked about this before: why should you care about the REITs? Even if you're a small operator, there's a trickle-down effect. Public Storage and Extra Space historically have bought mostly in primary markets, where cap rates are more competitive than secondary and tertiary. Now, by buying NSA, they are everywhere — NSA is in secondary and tertiary markets. When I first looked at Waco, Texas in 2021-2022, there were zero REITs; now Extra Space is there, and there are some NSA brands, so Public Storage will likely appear too. That's a huge ripple across the industry. There are pros and cons: more liquidity in secondary and tertiary markets because a group like Public Storage is there — but it's now more competitive. If in years past you could skate by without going after the REITs, now Public Storage may be your competitor across the street, and that changes the operating dynamics. Chris Berg (05:25): I want to get into the distinctions between the two in a moment. But what stood out to me in the Public Storage call was how they kept talking about "the platform, the platform, the platform." You're a tech guy. When you talk about secondary and tertiary markets and add the Welltower JV — I'd love your take as a tech person. What do you see happening with NSA and the Welltower JV? For people unfamiliar: Welltower is very data-centric, robust in how they use algorithms and data. Public Storage even talked about their "micro" strategy in the call. What's your assessment for the next few years? Noah Starr (06:18): For folks unfamiliar with what Public Storage did: they partnered with Welltower to provide their operating-performance data to Welltower — a standalone publicly traded company that specializes in transforming data into insights. That's the most relevant thing in society today: how do you use AI to generate insights? It requires really good structured data, which Public Storage has. Chris Berg (06:55): And Welltower's focused on senior living, correct? Noah Starr (06:59): I think so — this is their first foray into self-storage. What's commendable about Public Storage is they recognize their own circle of competence. Public Storage can operate stores really well, develop them, underwrite — and there's a lot of work to transform all these NSA stores into Public Storage: CapEx, brand, personnel. They need to stay hyper-focused on that. By partnering with Welltower, who's hyper-focused on deriving insights from data, it's a really good example of staying in their lane, in their circle of competence, while taking advantage of new technology Welltower is potentially some of the best in the world at. Compare that with most of the conversation about technology — how you can now build everything yourself. Chris, you're an example — you're building everything yourself, and it's amazing, and we want to empower you to do that. But there are trade-offs if you build it yourself, especially if you've never done it before, compared to Public Storage, who recognize they could hire and train people to build the best data-driven investment process ever — or jump the line and partner with the best already, and focus on their core competency. Chris Berg (08:36): Well said. How do you extrapolate that for investors and operators — what should they pay attention to? Noah Starr (08:50): We've been saying this for years — it's the reason we started TractIQ. The biggest players have the data, the resources, the insights, and they're running circles around the rest of the industry. There's a reason Public Storage, even in this environment, is seeing same-store NOI growth, and why they have $600-plus million under development when times are incredibly tough for development. It's because they lean into technology and data. For the rest of the industry, I'd argue it's been heavily disrupted — groups like TractIQ, layered in with new technology from Claude and ChatGPT, want to level the playing field. It's never been easier to level it if you're curious and take these tools seriously and use them every day. So even with the structural advantage Public Storage has, it's also never been tighter — the operator with even two stores can now get access to something unthinkable years ago. Chris Berg (10:11): A couple theses for you to push back on. I heard Brett Henry recently on the NSA/PSA acquisition. He said it tells you everything you need to know about how people perceive the industry. It's been a tough few years, but his thesis is: when they spend $10 billion, they probably think we're close to the bottom. Do you concur? Noah Starr (10:36): Let me share my screen — I'm a data person. On "close to the bottom": Public Storage reported same-store revenue up 2.6%, Extra Space up 1.7%. We're still seeing web-rate declines year over year — Public down 3.8%, Extra down 7%, CubeSmart down 6.1% (they dropped earnings today). But in the context of rates, we've been at pre-COVID-level rates for the last year or so. That tells me the whole COVID era — we've already been back to those norms. Look at the treasury rate and cost of capital: settled for a year-plus. So the data suggests we've gone above the trough. Public Storage making this acquisition — I imagine we'll look back and say they timed it really well, but it's hard to know. In their underwriting, as they've said with their operating platform, they underwrote to get massive lift from expense reduction, brand value, and other things — so the transaction probably works at today's underwritten rents regardless of overall industry improvement. That's why they'll be successful. Chris Berg (13:00): The other piece — with Public Storage now having the NSA portfolio and the Welltower data, my read is they'll start to explore micro-markets within secondary and tertiary markets. Is there an opportunity to be almost the Burger King to their McDonald's — watch where they go in these markets and follow them, buy land or assets there? Or what are your thoughts? Noah Starr (13:32): That's tough to do in practice, and it's all relative. If Waco was a market you avoided but now, because of the REIT presence, you want to go after it — the capital is going to follow pretty quickly, if not already bidding. I find it hard to believe you could buy a seven-cap in Waco three months ago and still buy a seven-cap today, knowing cap rates are going to compress. We've probably already seen the compression. What this might allow some groups to do: if you thought five years from now you'd sell Waco at a seven-cap, maybe that's now a more conservative estimate. So if you bought in Waco a year, two, three years ago, it could be a really interesting time to see how values have changed. I'd encourage anyone in secondary or tertiary markets — message me, I'm curious if you're seeing this. Storage is a hyper-local business. Are you buying it correctly? Is the cash flow covering your proposed debt? Do the supply-demand characteristics make sense? What are occupancies and achieved rates of nearby facilities with CMBS loans? All that still matters — and I'd never underwrite with the hope that "Public Storage is here, so I'll overpay a little because they'll bail me out on the exit." Chris Berg (15:23): Thank you for that. Everyone's talking about the Sun Belt — we'll get into Extra Space in a moment, but even Joe Margolis said it's been rough there, oversupplied. Phoenix getting mauled. We've got an asset in Phoenix that's more than doubled what Public Storage proposed for the budget. Like you said, it's a very neighborly business — if you find the right asset in the right neighborhood, it can still perform even in markets you're told are being crushed. Noah Starr (15:57): This slide is timely. It shows the 10x10 non-climate web rate from Q1 '25 to Q1 '26 for Public, Extra, and CubeSmart. In the Sun Belt, even this year, rates are down almost 15% blended for Public Storage relative to the Midwest and coastal cities. To my earlier point — it's a hyper-local business. You can find something amazing in Austin right now. But overall trends in Austin and a lot of Sun Belt markets are still in recovery because of so much storage oversupply — and in Austin, so much new housing, which made multifamily rents way more affordable. That flips the news framing of rates getting crushed in real estate. So the Sun Belt is still facing challenges, and these cycles take years — they don't get fixed as quickly as some might like. Chris Berg (17:23): Anything else in your presentation you want to share? Noah Starr (17:29): To dive deeper into the Sun Belt — this looks at Public, Extra, and Cube across Sun Belt, Midwest, coastal, national. Public Storage has had the largest decline in web rates across the Sun Belt, but as a nation they're only down 4%. A lot of other markets are seeing good recovery in the street rate. Even if overall rates are still down, that's been dragged a lot by the Sun Belt — so still a lot of markets in recovery. And I looked at CMBS-reported facilities in 2023 vs. 2024: Public Storage has continued to be the brand that's improved the most across their NOI, continuing into 2026. Creating these slides has never been easier. Chris Berg (18:58): So I'm going to ask Eric to bring up the two-operating-philosophies graphic while you're still sharing. One thing that jumped out — and we've talked about this — is it's abundantly clear PS is saying "we're going all in on a platform and we'll use tech to drive NOI," whereas Extra Space, you mentioned, expenses are up, still quote-unquote "heavy humans." Both could win — which do you think gets the greatest returns over the next decade? If you were CEO of Extra Space and they asked "which one?" — what thesis do you like most? Noah Starr (19:57): The new leadership at Public Storage has made a splash, no doubt. There's energy around what they're doing — clear strategy, direction, communication. They're leaning into technology, operationally and on the investment side, and swinging for the fences with NSA. A lot to be excited about. At the same time, Extra Space has an incredible business and platform too. My read: even if they're not announcing a Welltower partnership, they're doing those things in-house, and have been for a long time. When you're a new CEO and want the market to take you seriously, it makes sense to announce all of these things — but then everyone knows what you're doing, versus Extra Space, who've been doing this a long time with a great leadership team, scale, and an outstanding third-party management team. Their bridge-lending program is massive and dwarfs Public Storage's. They haven't leaned into development nearly as much, which makes them a little less risky — all those third-party-managed stores are pure profit, no real risk, and not a lot of development risk. So a lot to like about Extra Space, but they won't get the headlines right now because of the leadership shift at Public Storage. I don't think I'll publicly pick a side — other than to say Public Storage is a customer of TractIQ and Extra Space isn't, so however that sways me, I'll let it speak for itself. Chris Berg (22:11): That was a fair analysis. Both will have strengths. Joe Margolis said 30% of their clientele never touch them on tech. And a woman on LinkedIn told me when I posted about this: "anyone I see cutting headcount because of AI, I'm not a customer." So we'll see how it plays out — everyone's solving for NOI and FFO for shareholders. Anything else on the earnings or your thesis for the next couple of years? Noah Starr (22:49): This quarter is a huge shift in self-storage, and Public Storage is the best example. We've been talking about AI and technology for years — Public Storage is doing it right now, at scale, larger than ever in this industry. If you haven't been taking that seriously, you really should. It'll impact Extra Space, SmartStop, CubeSmart — ripple effects across the whole industry. We'll see more companies announce partnerships and initiatives like this, and have their assumptions tested. I've talked to a lot of the biggest groups, and there are ideas they've had for a long time about how performance is impacted by things — now you can see it in five minutes, and test things you've never been able to test before. What will we learn from all this new technology? We're still scratching the surface. This is probably the quarter the industry supplanted itself as taking this seriously — and if you're not, you'll be left behind. Chris Berg (24:13): How much can you tease about a release coming in the middle of May? Noah Starr (24:21): On May 12th we're doing a webinar — I'd love to have you on one in the coming months too. John Lindsay is going to present his newest listing, which I don't think has been out yet — a pretty nice-sized portfolio — and we're going to underwrite it in a way that's never been possible before. I spent years in institutional investment, started my own investment company, built models and memos that took weeks — you'd get knits back, late emails, the whole culture of "the deck takes a week." You can now do that in 20 minutes, and it's a better memo than we'd have built in a week. We'll show how, using not just Claude but something else that has a lot of our customers and our team really excited. Join the webinar and check my LinkedIn — I'll be teasing it over the next week or two. Chris Berg (25:35): This is a shameless plug — but because it's powered by you, it's a shameless plug for you too. Something that jumped out in the earnings calls, more in Extra Space's: Joe Margolis was clear they have not seen demand go down at all, even with oil prices up and inflation, and Powell keeping rates where they are. Demand is pretty normal right now, allowing them to keep their ECRIs (existing-customer rate increases) in place. When do you think the housing market unlocks to increase demand? Chris Berg (26:26): Can you hear me, Noah? Maybe we lost him. Noah Starr (26:41): Yeah — I said this to the Wall Street Journal: there has never been a period in American history where more people have used self-storage than today. Can you hear me now? Chris Berg (26:52): Yes, we can hear you great. Chris Berg (26:56): So, while we sort out the connection — everybody, do yourself a favor and check out storagedemandscore.com, powered by TractIQ. It's a really powerful tool, and we're going to make it even more robust with some regional elements. It's based on an equation from the Self Storage Association. Everyone in our industry talks about supply, supply, supply — and good news from these earnings calls, both companies said they think supply is now going down because it's so tough to develop. This tool is about demand, which gives you an extra margin of safety as an investor or sponsor to make sure that when you develop or buy an asset, there's actually demand in the market. We use what the SSA has said about demand — households times usage rate (usage has never been higher, as Noah just mentioned) times the average 125 square feet per household — run through a formula. Put in an address and your projected project size, hit the blue button, and it spits out a demand score. It's not the only thing to look at, but it gives you a metric to confirm there's actual demand and desire for the product in that marketplace. Chris Berg (28:34): Noah's connection cut out again. Noah, we want to say thank you — we appreciate you joining us. This is the Self Storage Report, I'm Chris Berg with Abernathey Development. Definitely share this with your colleagues and friends — great information from Noah, he does an outstanding job. Subscribe to the channel. Noah Starr (29:00): Thanks for having me. Sorry about the Wi-Fi being spotty — no idea what happened. You guys already know what I have to say. Chris Berg (29:08): Check out TractIQ.com, and let Noah know you saw him on the pod. If you want to find out more about what they're doing, they've got a huge release coming in the middle of May — if you're into tech, it will blow your mind. They gave me a sneak peek and it's been phenomenal, some of the things happening with Claude. I'm Chris Berg, this is the Self Storage Report — we'll see you back here next week. We've got Brett Henry joining us from Trojan Storage. [END OF TRANSCRIPT]