Self-Storage Report June 2025 with Yardi's Tyson Huebner

THE SELF STORAGE REPORT — EPISODE TRANSCRIPT Episode: Self-Storage Report June 2025 with Yardi's Tyson Huebner Guest: Tyson Huebner, Director of Research, Yardi Matrix Host: Chris Berg — Abernathey Development Recorded: June 18, 2025 Video: https://www.youtube.com/watch?v=wQUsxyzySZ0 Key topics: Yardi Matrix June 2025 national self-storage report; national advertised rate growth of negative 0.2% in March, negative 0.4% in April and negative 0.5% in May; month-over-month rent growth every month since December; REITs pulling back on rate pushes in May; Google search trends for self storage hitting index 100 nationally and in Chicago; Chicago posting the highest rent growth of the top 30 markets in May; Tampa outperforming on hurricane-related demand despite a large pipeline; oversupplied markets including Las Vegas, San Antonio, Phoenix, Charlotte, Orlando and all of Florida; recovering low-supply markets including Chicago, DC, San Jose, the Bay Area, Portland and Minneapolis; national new supply down 15% in 2025 and 13% in 2026 on net rentable square footage; the under-construction pipeline falling five or six straight quarters; construction costs rising from tariffs on materials and the immigration crackdown on labor; a Huntsville, Alabama trade area where 10x10 rents fell 30% as four stores leased up; slow transaction volume with class A pricing and cap rates stabilizing. 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: Welcome to the commercial real estate report. I'm your host, Chris Berg. Yardi Matrix just released their June national self-storage report. Joining us today, director of research at Yardi Matrix, Tyson Huebner. Tyson, great to see you again. How are you? Tyson Huebner: Good to see you, too, Chris. I'm good. Chris Berg: Let's jump right in. So, you guys just released this report. What do you believe, for the people watching, is the single most important thing they should know or take out of the report? Tyson Huebner: Well, first off, rent growth — rent growth from May kind of stalled. And I think we had seen improving trends for about 6 months. We got up to, I think, negative 0.2% in advertised rate growth nationally in March. It's come down to negative 0.4% in April and then negative 0.5% in May. But some of that is just noise and has to do with tougher comps from this time last year, when operators were pushing rents. Rent growth month over month — rents have been growing month over month since December. We saw a little bit less of a push in rents from the REITs in May, which I think was kind of driving that slower rent growth. But I think, you know, the story is the same, that things are stabilizing. We're getting more kind of clarity on street rents. Definitely stopping the bleeding when it comes to street rent declines. And, you know, as we've discussed, I think demand is starting to pick back up over the summer. Ironically, I just moved and it was very competitive here in Chicago to get an apartment. I think that's a good sign that, you know, even though home sales have been slacking, apartment turnover has been pretty high. And there's still, you know, plenty of sources for demand out there for self storage. It's not just related to one demand source. So things are chugging along. I think we're still bottoming. You know, we'll have the REIT kind of occupancy and in-place rent data in like a month and a half. So it'll be really interesting to see what happened in Q2. Chris Berg: So, I want to bring up this Google search trend that you actually shared at the Napa CSSA, and you sort of answered some of my questions I wanted to talk to you about, because the demand seems to be going up dramatically. You mentioned since January or so, and yet there's not a lot of housing transactions. So, you attribute that mainly just to people, you know, moving from apartment to apartment, or what do you attribute it to? Tyson Huebner: There's a lot of different things going on with self storage demand. You know, Tampa has been one of the best performing markets even though they've had one of the biggest pipelines. And that's because of hurricane-related demand. There are some apartment markets that are performing really well. And yeah, I think we're starting to see things kind of return to normal seasonal patterns. And, you know, it is very encouraging that rents have grown month over month for the last six months, and occupancy seems to have flattened out, at least as of Q1. So I think more recent data has been more positive than even our May rents might point out. So I'm really curious to see what happens. We won't get our June data until the end of June, but I would expect rate growth to kind of be flattish year-over-year. And the backdrop for that is not only, you know, this demand, which you're showing here with the Google search trends, but also just less supply. There still are a lot of markets — and some markets that are being impacted by supply. But I think nationally, and especially in the top 30 markets, supply has come down from its peak, which is definitely providing a lot of support and giving operators more confidence to push rates. Chris Berg: I want you just to speak to this data here around Google search trends. I mean, the seasonality — it's eerie how, you know, May every year is the top, January every year is the bottom. Yeah. If you read this as a stock chart, I think, as you're mentioning, hey, there's some good news in the future for self-storage operators. So, what do you see here? What should people extrapolate from it? Tyson Huebner: Well, people definitely move a lot more, move around a lot more during the summer. More likely to rent storage in the summer. You definitely see it in college towns as well — that those are like the most seasonal markets, and, you know, they'll push rates sometimes 50% in April, May just because they anticipate college students coming in, and then they'll have to drop them back down in August. So storage has always been a very seasonal sector. One of the good things about it, though, is that people will put their stuff in storage seasonally and sometimes forget it's there, or, you know, not be willing — and think they'll be there for a lot less time than they're actually storing their things. So storage benefits from kind of this surge in demand in the summer. And certainly I think, you know, the last kind of two months of — well, really the last six months we've shown a positive trend in this Google search data, but the last two months we've seen some markets hit their high for Google search trends for self-storage. I'm just looking at Chicago right now, which had the highest rent growth of our top 30 markets in May. And, you know, I think — did you end it? No. Yeah, like going through June here too. Chicago's also at 100. So that means they're at their peak for Google searches for self storage going back to 2018. So a lot of positive indicators here. And again, I think June will kind of show a more positive trend than we've been — than we saw in May and April. Chris Berg: I mean, I'd love for you to speak to this just because it sounds like you've been following this for quite some time, the Google search stuff. So, you know, this is showing, as you're saying, this is a national graphic. This is real time, just so people know, for June showing a 100, which clearly we don't have all the data yet for June. But for it to even be nudging up against and or potentially surpassing what was going on in July, that just seems stunning to me. What's — Tyson Huebner: It is, it is interesting, because it is an index. So it's indexed to the highest period for searches. And if you'll see, there's a note in 2022 that they changed their data collection system. So it's not really super clear what — if that change impacts the trends recently and what we're seeing as like a surge in search volume recently. But I do think, you know, looking at this time series, you get a sense that demand has — maybe, maybe it's not as high as it was in 2021, but certainly back to its highest level in the last, you know, three, four years. Chris Berg: I was going to say, just the fact that it's surpassing what was going on in 22, because I recently shared, you know, the information around the REITs' pricing year-over-year, and it was, I think, middle of 22 up until just recently, as you mentioned. I mean, year-over-year growth in this industry was negative, which is extremely rare. Tyson Huebner: Yeah. Well, the REITs have been more aggressive pushing rates the last six months, I think. They have a little bit better gauge of demand. They've got obviously a lot more data, and they spend a lot more on marketing and revenue management. So I think that was an indication that things were bottoming. They're getting more aggressive on advertised rates. They pulled back a little bit in May, but still are pushing rents stronger than their non-REIT competitors, especially in some of the hotter markets. You mentioned — I was at, I was in Napa at the CSSA, the California SSA owners conference. And California's seen some of the strongest rent growth from the REITs, particularly like Bay Area. And, you know, again, I think they have a good gauge of demand, and usually the private operators will follow within six months to 12 months. So I think the fact that they have turned around their strategy a bit on advertised rates is a positive sign for the rest of the industry. Chris Berg: So would you say, based on obviously these patterns, it's pretty fair to say that, hey, rents are probably going to peak again in June, start to trend back down come July, August, the rest of the summer, but the — Tyson Huebner: Generally, actually, rate growth peaks in May. But I think we might see a little bit later peak, June or July, this year. And rates will start to decline again in August. But I don't think that they're going to fall off. I don't think rate growth is going to fall off in a significant way, just because we do have this tailwind of less and less deliveries. There are definitely some markets that are still struggling with deliveries. Las Vegas, San Antonio, Phoenix, Charlotte, a lot of the Sun Belt markets, really all of Florida. Those places are going to kind of see a turnaround a lot later because they still have a lot of new supply. I think I see one new property, one or two new properties in Vegas and Phoenix start construction or finish construction every week. Florida is the same. But there are a lot of markets that are well below their long-term average and well below their peak rates of new supply, and those are the places where you're seeing the strongest growth now. I mentioned Chicago, DC, San Jose, really all the Bay Area, Portland, even Minneapolis, which at one point in time had the highest amount of supply and lease-up, is now climbing its way out of that hole because they've seen such a turnaround in supply. And that really provides a roadmap for a lot of the markets that are still struggling with new supply. Chris Berg: So then here's also under construction. I guess kind of take us out into the future, if you would, Tyson, just based on what you're seeing, you know, going to maybe 26, 27, 28 — what do you anticipate? Tyson Huebner: Sure. Well, we — nationally, even though there are markets that are still seeing pretty active pipelines, nationally supply, I think it's coming down 15% this year and then 13% next year from 2024. That's net rentable square footage. And we've seen supply kind of shift to more secondary and tertiary markets. But there are markets that people are continuing to build in. There's a lot of projects even in these markets that have the highest supply and construction, which is Vegas, Phoenix, Orlando. There's still a lot of projects planned. So if the market does turn around in these places, you could see supply turn around there. But generally speaking, I think a lot of developers in these high supply markets are going to be kind of disappointed with their performance. And I think, you know, the lenders and the capital partners are looking at this data and they know where not to develop. So I think supply is going to continue to come down. Our supply under construction pipeline has fallen, I think, for five or six quarters straight now, which is a great tailwind for the industry, and it's coinciding with this increase in demand recently. So I think the second half of the year is going to look a lot better than the first half of the year. Chris Berg: And then what do you see for 27, 28? Tyson Huebner: Well, it's harder to project that far out. Our supply pipeline continues to come down, I think, all the way through 2029, but a lot of that will depend on how strong the recovery is really the next 12 to 24 months. So, like I mentioned, there are still a lot of projects in planning. A lot of those have stalled, and those could easily start construction. So our supply forecast is always kind of — is always evolving and changing with current trends. I do think that construction costs — and not just from tariffs on the material side, but I think also now on the labor side with the crackdown in immigration — construction costs are really going to also put a damper on new supply. So it's not just the poor performance that's kind of slowing supply. It's kind of a combination of factors. Chris Berg: Such a good point. The labor cost, and, you know, big conversation around property taxes and insurance, and so all those things obviously impacting NOI. So, you put out an interesting piece on LinkedIn. I want to just give you some love there so people can obviously go follow you, but, you know, you also just talked about what's happening. If I can bring it up here. Tyson Huebner: Yeah, I kind of beat up on developers a little bit, but I get email alerts each week that tell me what properties finish construction, what new properties start construction. I always like to go in and be a little bit of a — be a little bit of a troll and look and see what the supply situation each of those trade areas is. And what I've noticed is that people are still continuing to build in the same trade areas. There was one property here that I noticed in Huntsville, Alabama, that had four additional stores in lease-up. A new property just opened there and it has one under construction, and as a result rents have fallen 30% for 10x10s. Which is not abnormal. But certainly, you know, just the combination of all of these new competitors opening at the same time, it really changes the underwriting and changes the whole return picture for all of these developers. So I just kind of want to make the point that, you know, no matter how attractive demographics might be or population growth might be, everybody's kind of looking at those same numbers. So you really need to focus in not just on the demand side of the picture, but the supply side of the picture as well. Because no matter how attractive a trade area is, there's probably somebody else that thinks the same way. So, you know, not to beat up on the developers too much here — I know it takes a long time for these projects to get started — but I do think it's really, really important to focus in on what is the competitive supply situation and who else is building. Just so you know what's coming, and also to understand the impact of, you know, five new competitors opening in four years. Your rents are not going to be what they were in 2022. And, you know, sometimes the impact to rental rates can be, you know, not just one, two years. Sometimes it could take five, 10 years to get for those rates to get back, especially if there's, you know, another new property developing. Yeah, the underwriting is never set in stone. And you always got to kind of foresee any future changes in supply that could impact. Chris Berg: That's the thing — like, I don't see you beating up on developers. I just said, saying, "Hey guys, here's a warning, like just be aware that, right, be caught up in these lease-up wars, because you end up just crushing your own investment NOI." So I think it's a good thing that you're doing that, just to help people realize like, hey, in these lease-up wars. So anything else you want to add or share that I'm asking you, Tyson? Tyson Huebner: Not really. I have heard that the transaction market's been very slow this year, which I've noticed as well. I do think pricing is coming back. It's not something we cover in the report, but I had some slides about it in the Napa presentation, which, you know, anybody that's listening in can email me to get those slides. We have seen fewer sales so far this year. We've seen kind of slower sales activity. But I do think pricing, especially for class A assets, is getting a little bit more stability and starting to show an uptick, particularly in California, which I covered at the conference. So I think, you know — now, I wouldn't say now is the best time to sell, but because, you know, looking back three years ago, I'm sure your value was much higher than it is today. But I think that we're getting a lot more clarity into pricing. Certainly cap rates have stabilized. And I think that means, you know, now could be a good time to sell, or, you know, in the next 6 to 12 months. Chris Berg: Yeah, and I just think people see these, you know, Google search trends, they see the rates going back up. We're talking to more and more people that are like starting to dip their toe back in the asset class. So, great stuff as always, Tyson. Appreciate it. You mentioned people can email you if they want the presentation or anything else. How do they go about emailing you? Tyson Huebner: So, my email is my first name, Tyson. And I can share this monthly report with you. We can get you added to the email list for the monthly reports, and also share that California presentation, because I think there's a lot of great data in there and a full picture of the industry, and especially, you know, I covered a lot of trends in California. Chris Berg: Really, really good data in the California presentation. Again, tyson.huebner@yardimatrix.com — huebner@yardimatrix.com if you want to get some information. Just, sorry, it's yardi.com. Oh — Yardi. tyson.huebner@yardi.com. So, I want to get that correct, but reach out to him. Always open to, you know, answer questions, give you some data and some input. And Tyson, just keep up the great work, and thanks for the time. Tyson Huebner: Thanks for having me, Chris. Chris Berg: All right, this is the commercial real estate report. Share this with colleagues, and look forward to having you back. — END OF TRANSCRIPT —