Self-Storage Demand is COLLAPSING and what it means for YOU!

THE SELF STORAGE REPORT — EPISODE TRANSCRIPT Episode: Self-Storage Demand is COLLAPSING and what it means for YOU! Host: Chris Berg — Abernathey Development Recorded: February 25, 2026 Video: https://www.youtube.com/watch?v=5n_9emFhWMM Key topics: Home buyer demand at 5 out of 100 vs 29-30 in the Great Financial Crisis; Nick Gerli on Adam Taggart's Thoughtful Money podcast; Google searches for homes for sale at record lows; mortgage applications 40% below 2019-2020; Radius Report and Storage Cafe on moving as the number 1 storage demand driver; Bank of America data showing movers more than halved since 2021; Extra Space and Public Storage guiding flat to negative NOI for 2026; border encounters falling from 2 million per year in 2022-2023 to 237,000 in 2025, lowest since 1970; Pew Research Center migration data; Apartment List rents down 1.4% year-over-year with 1-2 months free concessions; New York SSA immigration panel question; Sam Zell's supply-and-demand econ whiteboard; lease-up underwriting stretching from 3 years to 5 years; building responsibly amid the supply glut Note: Speaker attribution reconstructed from raw captions. Light cleanup of transcription errors only; wording preserved. Timestamps and YouTube chapter markers removed. Turns marked [attribution inferred] could not be attributed with certainty. ————————————————————————————— Chris Berg: Home buyer demand is down by like 5x, the lowest level since at least 2001, maybe even more. This is exactly why self-storage demand is collapsing. We're going to dive into this today and explain really what does it mean for the industry and our assets. Welcome to the Self-Storage Report. I'm your host Chris Berg, head of business development and land acquisition for Abernathey Holdings. Um, let's just jump right in here. We, many of us know, you know, the impact that uh moving has on self-storage demand and the Radius Report that came out earlier this year. They talk about within the Storage Cafe that the number 1 driver for self-storage demand is moving. So, if nobody's moving, obviously demand in self-storage is cratering as well. A lot of people are talking about this glut of supply that we've seen over the past few years, but I'm not hearing a lot of talk of a lot of people talk about the impact that the lack of demand in the industry is really really having on. So, I want to dive in. Um, there was a great interview with, I don't know if you know Nick Gerli, but he's with Rent Reporter app. He was on Adam Taggart's Thoughtful Money podcast recently talking exactly about how home buyer demand is at the lowest level since at least 2001, maybe even further back. I think he's only had data through 2001. So, I'm going to play this clip for you and then we can discuss. Nick Gerli: Adam, on this, on this graph, we look at mortgage applications, pending sales, real estate searches on, on the internet for, for real estate, and then uh we also look at home buyer sentiment metrics. So, we look at kind of this composite of all these different things. It's not just one, It's not just one demand metric. So, it's a bunch of different things. In February 2026, it's a 5 out of 100. Like I, and the worst it got in the last downturn was a 30 or a 29. Adam Taggart: Wow. Nick Gerli: Just think about that for a minute. So, in the, in the Great Financial Crisis, home buyer demand got down to a 29 or 30. Today, we're at a 5. Chris Berg: So, if and when the spigot opens back up, clearly it's going to have a huge impact on self-storage. Right now, you can understand why rates just continue to sort of clunk along the bottom here, and who knows for how much longer that's going to take place. Nick Gerli: At a 5 today. 80% of Americans say it's a bad time to buy a house. We've never seen anything like that for an extended period of time. Google searches might be the most important chart in housing. Google searches for homes for sale are at their lowest level ever. Ever. Mortgage applications are 40% below where they were in 2019-2020. It's the worst demand market ever. The worst Chris Berg: Demand market ever. And the reason I wanted to play this clip for us is because I don't think it's something that gets talked about enough. And so, I, I love the late great Sam Zell. In fact, I've got a, a picture of him here. Probably one of the greatest real estate investors in the history, right? And so, he always shares this great story about when he walked into his intro to econ class in Michigan. And up on the whiteboard, and, and look, I'm a really simple guy. I think storage, if you break it down, can be a really simple business if you just keep it at these 2 things, which were on his econ whiteboard, supply and demand. Everyone talks about supply. Not a lot of people are talking about this demand piece, which is critical if you're going to have a really, really great asset. So, also I wanted to share this with you. Recently, a Bank of America put this out. You can see I put this out on LinkedIn recently. I think the most important line here is that it says since 2021 that the people that are picking up and moving, the number of those picking up stakes has more than halved since 2021. You can see the graphic down here. I mean, the, the percentage of Americans moving, especially the different MSAs, again, is cratering. If there's no movement, demand for self-storage typically craters as well. Thus, again, why you're seeing even the REITs that recently had their earnings calls, you had Extra Space and Public saying, "You know, we don't like saying this, but we see flat to maybe negative NOI for 2026, which is exactly how it's been for 2025." Uh, one piece that I did bring up, I was recently at the New York SSA and I had a question for the panelists there about immigration and their thoughts on the impact that immigration would have on demand in self-storage. Typically, you're looking at maybe like California, Arizona, Texas, Florida, more of these border states, but the impact it would have, um, really not much was discussed about it, but but again, I think Nick Gerli does a really nice job here breaking down the numbers. And when you see these numbers and you think about, "Look, how many people now are no longer coming across the border?" Which again, it's basic supply and demand, they're having an impact on demand for multi-family and/or self-storage. And whether you want to admit it or not, you know, a lot of times when people cross the border, you've got multiple people living in really small apartments or smaller houses, thus potentially needing a lot more uh storage just to put their stuff. So, here's Nick breaking down the numbers. Nick Gerli: natural migration. And undoubtedly, we're seeing um almost 50-year lows in international migration, which is starting to have a big impact on the rental market. So, this is a research article from the Pew Research Center talking about how migrant encounters at the US-Mexico border are at their lowest level in more than 50 years. And here's the data, Adam. We had this big surge uh in migration over the border in 2022-2023. We had uh 2 million people per year. We had 1.7 million people in 2021. Chris Berg: Just take a moment to think about that. 2 million people per year for 2 years in a row there, 1.7 as well. That's a lot of demand that's not being discussed. When you really think about it, 2 million people a year are crossing our border and now, which he's going to get to in a moment, it's basically zero. Nick Gerli: on 1.5 million people in 2024. So, this was close to I believe 7 to 8 million migration in a 4-year span, a record by far. Chris Berg: And I want you to, to look at those numbers. He's talking from '21, '22, '23, and '24. If you've been around self-storage for any prolonged period of time, what happened in '21, '22, and '23? I mean, you saw rates to skyrocket. Everyone was just like, "Oh my gosh, this is the greatest asset class ever." Right? I mean, Public Storage, Extra Space, having just huge numbers, huge margins. And I'm not saying, "Hey, this is a direct correlation to that." But obviously, when you've got 1.7, 2 million, 2 million people crossing the border, again, I'm, I'm a simple guy. Let's break it down, supply and demand. Nick Gerli: However, that is now dropped down in 2025 to 237,000, which is the lowest level going back all the way to 1970. Chris Berg: Lowest level of international immigration, people coming into our country, having more demand for our assets, lowest level since 1970. You've got the lowest home buyer demand since 2001 is all he has on the graph, which I'm presuming, when you think about it, 5x less than the great financial crisis. It could be the lowest home buyer demand potentially ever or at least 1970. It's staggering when you start to look at it from this metric perspective on how much demand is impacting assets really across the board. And a lot of it's cuz there's, it's just not there. Nick Gerli: And where this is having an impact on the housing market is with rents and rental demand. Because if we look at Apartment List's national rent report, they're reporting that rents are now dropping for apartments. They're down 1.4% year-over-year. So, we have apartment rent deflation for face value rents. In addition, landlords are giving big concessions on top of that, 1 month free, 2 months free. And the real reason why is this vacancy index. The apartment vacancy index, it keeps climbing. And it stabilized there for a little bit in 2024 when that big surge in immigration converted to rent. Chris Berg: So, I, I know you're translating this going, "Oh, okay. There's obviously huge vacancies in multifamily. Thus, is why we're having such again low demand for self-storage assets cuz there's just, there's just not as many people around that, that need it." And I, I think many people probably upset with, I'm going to say this nicely, but with some of the situations that are being utilized as far as pricing out there in the marketplace. And when you see the data again, 1.7, 2 million, 2 million less coming into the marketplace, you've obviously got to chase uh demand to fill up at, at least physical occupancy. So, it's math. And it may not be the, the, the information that you want to see, but I just would love to know your thoughts here on the breakdown of this demand piece. Um, I know there's other, obviously we've had this huge flood in supply as well, which a big part of that is cuz I think people um saw, "Hey, look at what's going on with Public and Extra in their margins. Like let's just go find a piece of dirt, we'll put up some steel, and we'll make money." It's not how this works. And a big reason I want to have this conversation today is to encourage people to build responsibly. I think a lot of people think again storage is just steel and it's easy and I'm just going to go make a bunch of money. I'm having a lot of conversations right now with brokers, people in the industry where you have people from hotels, multifamily, different asset classes get into storage, thinks this was just going to be a cash cow, um and now they're beginning to sell some of those assets either at entitlement or CFO or even as they're up and running, because it's just, it takes a lot longer to fill up than it did before. Many people now in the past where they would say, "Hey, if you're going to underwrite, you want to underwrite for, you know, lease up maybe for 3 years." Now they're suggesting, "Hey, you want to give yourself 5 years." And again, boils down to it because there's such a lack of demand. So, love to know your thoughts. Please share, um, and look forward to many more of these videos with you. Again, I'm Chris Berg, Head of Business Ac-, Business Development, Land Acquisition with Abernathey Holdings. — END OF TRANSCRIPT —