Recovery in self-storage markets depends less on which metro an investor is watching than on which submarket within that metro has reached supply equilibrium, according to Tom de Jong, Executive Vice President at Colliers.
North Las Vegas and the Value of Precise Market Labels
De Jong points to North Las Vegas as an instructive example. Rents in that corridor moved from roughly $1.80 per square foot to the 1.30 range, and de Jong says many pockets may now sit at or below $1.00. Asked whether rents could realistically return to $1.80, he was candid about the timeline: “I don’t know if they get back to that level anytime soon.”
That adjustment is not evenly distributed across a metro. When investors group Phoenix, Austin, North Las Vegas, and parts of Florida together under a single “oversupplied” label, they can miss that individual submarkets within those same metros may already be stabilizing. The distinction directly informs sharper underwriting.
Supply Pipeline as the Primary Recovery Indicator
De Jong is direct about which leading indicator matters most when evaluating a repositioning market: new supply. “The sub-markets where construction slows down or new supply stops being delivered, those sub-markets will recover first,” he says. He considers this signal more reliable than occupancy trends or absorption rates alone, because those lagging metrics confirm what the supply pipeline already predicted.
For smaller markets, the opportunity is amplified. “The smaller the market, the more impactful supply will be,” de Jong says. In a tertiary market, a single new facility can move rents and occupancy in ways that would barely register in a major metro. That asymmetry means investors underwriting secondary and tertiary deals can gain an edge by extending their supply analysis further out in time and geography than they would in a core market.
New supply also directly shapes rent growth assumptions. When additional facilities are entering a market, de Jong says buyers are best served by holding rates flat for the first three or so years while that supply is absorbed, rather than projecting rent increases.
The Three-Mile Submarket Consideration
The self-storage industry conventionally uses a three-mile radius as the standard submarket boundary. De Jong argues that in high-supply markets, a closer look pays off.
If two properties sit 3.2 miles apart, their three-mile competitive circles overlap, meaning each property draws from the same pool of potential customers, even if a standard submarket analysis would treat them as non-competing. “You have to look much more carefully and go much further out in markets where there’s new supply risk,” de Jong says. A deal that appears to sit in a clean submarket may face more competitive pressure than the standard radius suggests, and recognizing that early leads to stronger decisions.
In markets where new supply is still entering, this factor compounds. Investors who stress-test for overlapping competitive radii, rather than relying on standard three-mile analysis alone, position themselves to price risk to their projected rents and occupancy accurately.
Population Growth and Housing as the Long-Term Variable
Beyond supply pipeline analysis, de Jong points to residential housing strength as the ultimate determinant of which markets recover fastest. Self-storage demand is closely tied to household formation, moves, and life transitions, all driven by housing activity. “The biggest hurdle is the housing market,” he says. “Which market will have the best housing market recovery? That’s probably the market that does the best overall.”
Las Vegas, for example, has land available for residential growth, which de Jong sees as a promising long-term tailwind. Population growth and housing recovery build steadily, curing oversupply over time and setting the foundation for durable demand.
High-Barrier Markets and Where Capital Is Moving
Markets where new construction is difficult continue to outperform. De Jong says San Francisco is doing “extremely well,” Seattle is performing well as a high-barrier market, and Boston remains strong. Los Angeles is performing reasonably well, with recent new supply and demographic shifts shaping a measured outlook.
Chicago has been a welcome surprise. De Jong says high property taxes, particularly in the city itself, kept many investors cautious for years, and rents there are now performing well.
Meanwhile, capital that once concentrated in top-tier markets is opening opportunities for smaller investors in secondary and tertiary locations. Large institutional buyers are active in core markets like Los Angeles and the San Francisco Bay Area. Second-tier capital has moved into secondary and tertiary markets, and smaller investors have gone further still. They are finding attractive returns in places like Cheyenne, Wyoming; Des Moines, Iowa; Boulder, Colorado; Santa Fe, New Mexico; and Tucson, Arizona, as well as markets with similar demographic profiles.
De Jong also notes growing interest in international markets. Canada has become much more active, with Public Storage making a significant push there. He sees increased activity in Brazil, Dubai, and European countries broadly. The U.S. has roughly 60,000 self-storage facilities, a mature market that makes less crowded international markets increasingly attractive to operators looking for growth.
Portfolio Acquisitions as an Alternative to Development
De Jong says one trend he is watching closely is the shift from building to buying. Large developers with significant capital commitments have pivoted toward acquiring existing portfolios because, in some cases, they can buy at or below replacement cost. “It’s cheaper for them to buy right now than it is to build,” de Jong says. For investors evaluating opportunities, that dynamic reinforces the submarket-level discipline de Jong advocates: the best acquisition opportunities sit in specific corridors where supply has reached equilibrium.
About Tom de Jong: Tom de Jong is Executive Vice President at Colliers and Founding Principal of the De Jong Self Storage Team. With 19 years at Colliers, a $2B+ transaction record across 32 states, and an SIOR designation, he is one of the most recognized specialists in self-storage brokerage and investment advisory in the United States.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
