Is Self Storage a Good Investment? How Facilities Earn and Where the Risks Are
This is general information, not investment advice. Talk to a licensed financial advisor, CPA or attorney before you invest in or finance a facility.
People ask whether self storage units are a good investment because the model looks simple. You rent space by the month, staff is light, and tenants rarely move out fast. That simplicity is real, but so are the risks. This guide explains how a storage facility investment earns money, where it loses money, and what the largest public owners reported for fiscal 2025. Use it to test a deal before you commit, not as a verdict.
How a storage facility earns money
Investing in self storage means owning a stream of small monthly leases. Most revenue comes from three places.
- Rent. Month-to-month rent on units is the core of the business. Rates can change with notice, so income can follow the market up or down.
- Fees. Admin fees, late fees and lien or auction fees add income. State lien law limits what you can charge and how.
- Protection plans and ancillary sales. Tenant protection plans or insurance, locks, boxes and truck rental add margin on top of rent.
Ancillary income is not small at scale. Public Storage reported tenant reinsurance premiums of $250.7 million for fiscal 2025, up from $226.6 million in fiscal 2024 in its 10-K. A small operator will see far smaller numbers, but the share of income can still matter.
The structure you choose affects risk and regulation. Read tenant protection plans vs tenant insurance before you build these numbers into a pro forma.
Rent growth from existing tenants is a major lever. Public Storage said fiscal 2025 same-store revenue was relatively unchanged, with higher rent per occupied foot offsetting lower occupancy. It credited rate increases to long-term tenants and noted lower move-in rates for new tenants.
What the large REITs reported for fiscal 2025
Public storage REITs file audited annual reports with the SEC. Their same-store figures show how mature, stabilized facilities performed. They are portfolio averages, not a forecast for any single property.
| Company | Metric | Fiscal 2025 | Fiscal 2024 | Source |
|---|---|---|---|---|
| Public Storage | Same-store weighted average square foot occupancy | 92.0% | 92.4% | PSA 10-K |
| Public Storage | Same-store realized annual rent per occupied sq ft | $22.54 | $22.43 | PSA 10-K |
| Public Storage | Same-store cost of operations change | +1.8% | n/a | PSA 10-K |
| Extra Space Storage | Same-store average occupancy | 93.7% | not cited here | EXR 10-K |
| CubeSmart | Same-store period average occupancy | 89.7% | 90.4% | CUBE 10-K |
| CubeSmart | Same-store net operating income | $666.8M (-1.1%) | $674.5M | CUBE 10-K |
| National Storage Affiliates | Total portfolio average occupancy | 83.8% | 85.6% | NSA 10-K |
| National Storage Affiliates | Same-store rental revenue | $652.5M | $667.5M | NSA 10-K |
The pattern is plain. In fiscal 2025, all four reported flat or lower occupancy, and two reported lower same-store income. Public Storage attributed its occupancy decline to softening of demand and said it lowered move-in rates.
Extra Space described the industry as mature, with average occupancies typically around 90%. Treat that as a ceiling for planning, not a starting point.
These companies have scale, brands, revenue management systems and cheap capital. An independent facility will usually run below them on occupancy and rate. Compare deals against local comps first.
The main risks
New supply
Storage is easy to build compared with other property types. A new facility down the road can pull tenants and force rate cuts. Extra Space warned in its 10-K that development by other operators has intensified competition and could reduce occupancy and rates.
Check permits and projects under construction within your trade area. A feasibility study should count them.
Lease-up time
A new facility starts empty. It earns little while expenses and debt service run from day one. Lease-up length depends on the market, and you should not assume a fast fill. [SOURCE NEEDED] for any industry average lease-up period.
The REIT filings show the gap. CubeSmart reported period-end occupancy of 84.0% for stores outside its same-store pool (2024 and 2025 acquisitions plus new or not-yet-stabilized stores), against 88.6% for its same-store pool.
Rate pressure
Month-to-month leases cut both ways. You can raise rates, but competitors can cut them too. Public Storage reported lower move-in rates for new tenants in fiscal 2025. Street rates are not locked in.
Financing costs
Most deals use debt. Higher interest rates raise debt service and push down what buyers will pay. A loan that works at one rate can fail at a refinance two points higher. See financing a self storage facility for loan types and terms.
Operating costs
Property tax, insurance and payroll rise even when revenue is flat. Public Storage said same-store cost of operations rose 1.8% in fiscal 2025, mainly from property tax, while revenue stayed flat. Margin can shrink without any drop in rent.
Physical vs economic occupancy
A seller who says "90% occupied" may mean units, square feet or neither. Physical occupancy is how full you are. Economic occupancy is how much potential rent you actually collect.
Discounts, below-market legacy tenants and unpaid rent all open a gap between the two. A buyer should underwrite collected rent, not unit count. The full method is in physical vs economic occupancy.
Ask for a rent roll, 12–24 months of bank deposits and a delinquency report. Reconcile them. If deposits do not match the rent roll, trust the deposits.
Build, buy or invest passively
There are three common ways in. Each has a different risk profile.
| Route | What you own | Main risk | Who it suits |
|---|---|---|---|
| Build new | Land, building, all lease-up | Lease-up time, construction cost, new supply | Owners with capital to carry losses for years |
| Buy existing | A facility with tenants and history | Overpaying, hidden deferred maintenance, weak books | Owners who can verify financials and run operations |
| Public REIT shares | A small slice of a large portfolio | Market price swings, no control | Investors who want exposure without operating |
Buying an existing facility gives you real numbers to test. Our guide to buying an existing self storage facility covers due diligence.
Decision checklist before you invest
Run every deal through this list. A "no" is not always fatal, but it needs a plan.
- I have counted existing and planned facilities within my trade area.
- I have underwritten collected rent, not physical occupancy.
- My pro forma uses local street rates, not REIT averages.
- I have modeled at least two years of lease-up for a new build.
- The deal still covers debt service if interest rates rise at refinance.
- I have modeled property tax after a sale reassessment.
- Protection plan or insurance income is modeled at a realistic take rate.
- I have reserves for repairs, roofs, paving and gates.
- I know who will run the facility day to day and what it costs.
- A licensed advisor, CPA and attorney have reviewed the deal.
Frequently asked questions
Is self storage a good investment right now?
It depends on the local market and the price. In fiscal 2025, the large REITs reported flat or falling occupancy. Underwrite the specific deal, not the sector.
Are self storage units a good investment for a small owner?
They can be, if the facility has demand, sound books and manageable debt. Small owners lack REIT scale, so plan for lower occupancy and rates.
What occupancy do mature facilities run at?
Extra Space described typical industry occupancy as around 90%. Public Storage reported 92.0% same-store occupancy for fiscal 2025. Both are large portfolio averages.
How long does lease-up take?
It varies by market and supply. No single figure applies. Get local data from your feasibility study. [SOURCE NEEDED] for any national average.
Is investing in self storage REITs the same as owning a facility?
No. REIT shares give you a slice of a large portfolio with no operating role. Owning a facility gives you control and all the local risk.
Related guides
Sources
- Public Storage, Form 10-K for fiscal year ended December 31, 2025 (SEC)
- Extra Space Storage Inc., Form 10-K for fiscal year ended December 31, 2025 (SEC)
- CubeSmart, Form 10-K for fiscal year ended December 31, 2025 (SEC)
- National Storage Affiliates Trust, Form 10-K for fiscal year ended December 31, 2025 (SEC)