Self Storage Development Opportunity of a Lifetime

October 30, 2023

The lending environment remains as tough as it has ever been in self storage.

I spent the last week meeting with seven national and regional banks, and one of the major institutions believes this lending environment is worse than 2009.


I’ve discussed the reasons for the tough lending environment in previously published newsletters, and while we have strong relationships with lenders that are financing our investments, this freeze in the debt markets has me excited about the future of developing new self storage facilities.

A few charts to explain:

During the aftermath of the Global Financial Crisis in 2009, self storage developers were largely unable to obtain construction loans from banks. This had a dramatic impact on the number of new facilities that were eventually built.


Meanwhile, the demand for self storage witnessed a steady increase as awareness of self storage continued to grow.


Putting the two together, if supply doesn’t grow, but demand continues to increase, then the rental rate you can charge for an empty unit goes up.


And the number of empty units goes down.


While we are working ten times as hard to find construction financing for our projects, we are as bullish as we have ever been about the prospects for the development projects that we are putting into the pipeline and ultimately believe we will look back in three or four years and see the current period as one of the best opportunities to build self storage that the industry has ever seen.