Why is 90 percent occupancy not always the right assumption?

If every deal you see assumes 90 percent-plus occupancy, pause.

The state-level and non-REIT data tell a more nuanced story. Most states report occupancy between 80 percent and 90 percent, with a total weighted average of 88.3 percent. Storable’s 25,000-plus facility dataset averaged 81.8 percent over the last year. That does not mean a strong facility cannot run above 90 percent. It means buyers should not blindly assume 90 percent in every market. Stabilized occupancy depends on supply, population growth, competition, pricing discipline, management quality, and seasonality. When a facility is bought or sold, the occupancy usually takes a hit. Many of our underwrites don’t anticipate an increase in economic occupancy until after the first year because we acknowledge a stabilization phase. Some tenants will get annoyed by the transition to new management and new policies. Delinquent units may be auctioned off rather than provide phantom occupancy figures. In today’s environment, disciplined buyers underwrite a range of occupancy outcomes, not a single optimistic number.

What does normal occupancy really look like?

A lot of people still underwrite self storage like it is 2021. That is dangerous.

REIT weighted occupancy peaked at 96.6 percent in Q2 2021, while non-REIT occupancy peaked at 90.0 percent. By Q4 2024, occupancy had bottomed at 90.4 percent for REITs and 80.9 percent for non-REITs. The lesson is not that storage is broken. The lesson is that pandemic-era occupancy was not normal. If a seller presents peak occupancy as stabilized performance, buyers should normalize the numbers. A good underwriting model should account for seasonality, local supply, concessions, and the difference between physical and economic occupancy. While delinquent units present an opportunity for accounts receivable, they should not be counted as normal physical occupancy. We consider any unit greater than 60+ days as a vacant unit because they are less likely to come current, and a properly followed lien and auction process will result in an empty unit within 60 days usually. 

Why do construction starts matter more than headlines?

A market can look healthy today and still become risky if too much new space is already in motion.

In markets tracked by Matrix for at least 24 months, the under-construction pipeline declined 6.2 percent quarter over quarter to 49.79 million net rentable square feet and 17.3 percent year over year. That decline is encouraging, but it does not eliminate risk. Most of that inventory still needs to be delivered and absorbed. Construction starts also remain a leading indicator. If starts fall, future competitive pressure may ease. If starts rebound because rates grow and capital or construction gets cheaper, supply risk can return. For investors, the underwriting lesson is clear: do not evaluate occupancy and rent today without also evaluating what is scheduled to open tomorrow. Unless a municipality has barriers in place- such as a moratorium- an errant developer can throw a wrench into an entire market. We try to leave “meat on the bone” when looking at a market. If the equilibrium supply index for a market is 7- meaning 7 net rentable square feet per capita results in an average occupancy of 85%- we try to have the supply index come in at less than the equilibrium AFTER our development is accounted for. We’d like to see room for another 1 or 2 self storage facilities before the equilibrium supply index is hit so that we have a protective buffer to our lease up or stabilized occupancy. If we reach stabilized occupancy and there are no new developments to erode the buffer, then expansion can be considered.

Is the self storage supply pipeline slowing?

One of the biggest questions in self storage right now is simple: are we overbuilt? 

The supply data shows a mixed answer. Yardi Matrix increased its Q4 2025 forecast by 4.3 percent for 2025 and 4.6 percent for 2026, bringing expected 2025 completions to 59.44 million NRSF and 2026 completions to 48.23 million NRSF. But the more important trend is deceleration. The forecast still shows new self-storage supply declining through 2027 and beyond. That matters because new supply pressures rents, occupancy, and lease-up timelines. For buyers, the right question is not, 'Is storage still viable?’ The right question is, 'How much new storage is hitting this exact trade area?’. Storage is a hyper local business with 70% of renters coming from a 10 minute drive area from the facility. There used to be a “if you build it, they will come” mentality with self storage development. That’s not the case anymore. Many developers have been burned by fast and loose underwriting resulting in slow lease up. Even seasoned developers that did their homework pre-development have felt the impact as additional developments sprout up agnostic of supply and demand, tanking the entire trade area. Construction costs have risen significantly bringing pause to many builders who relied upon cheap materials and quick build times, especially in the southern regions of the US. Most of the already zoned, flat land in high population areas has been gobbled up. Municipalities are placing moratoriums on new storage after a glut of development in the late twenty-teens and early 2020’s. These realities have cause the self storage supply pipeline to slow but certainly not stop.

Why do independent self storage owners still matter?

The big operators are everywhere, but they do not own the whole industry. 

The five largest operators account for 19.3 percent of facilities and 35.6 percent of rentable square footage. That leaves a very large independent market. In fact, owners outside the top 100 still represent 66.4 percent of facilities and 37.3 percent of rentable square footage. That fragmentation is why acquisitions remain such a major opportunity. Buyers can still find assets where professional management, revenue management, better websites, call tracking, and local marketing can move performance. For owners thinking about selling, fragmentation also means buyers are actively looking for well-located properties with clean financials and upside. One of the best strategies in self storage is aggregation. Another way to describe this same strategy is defragmentation. Smaller operators can buy individual self storage facilities and package multiple together to form portfolios for larger operators to buy. One of the biggest downsides to self storage is that it’s comparatively difficult to deploy capital. In multifamily, you can buy a single 500 apartment, Class-A complex and drop tens of millions of dollars, if not hundreds of millions of dollars easily. In self storage, even the largest of self storage facilities top out below $50 million. This difficulty in deploying large amounts of capital is a road block to large private equity groups and REITs. The biggest of players need to resort to acquiring other large operators to get the scale and volume necessary. Buying from independent operators- mom and pop owners that have 2 or less facilities- and accumulating regional portfolios of self storage, creates a more attractive product as a result of appeasing the desire to deploy larger check sizes. Just by aggregating these independent facilities, a premium is applied as a result of the scale of investment. We find that a 20% plus premium is possible just by aggregating individual facilities into a larger portfolio. As the larger operators accumulate more of the independent facilities, the self storage industry becomes less fragmented.  

How big is the self storage industry?

Self storage is not a niche side business anymore. It is a multi-hundred-billion-dollar real estate sector. 

The U.S. self-storage industry is estimated at approximately $394 billion. The 2026 Self Storage Almanac also identifies 65,000-plus active facilities in the United States, more than 2.4 billion square feet, and over 3,900 known developments nationwide. That matters because scale changes how investors should think about the asset class. This is not just rows of garage doors. It is a national operating business with local demand drivers, fragmented ownership, pricing software, call handling, digital marketing, supply pipelines, and cap-rate discipline. For high-net-worth investors, the opportunity is not merely buying storage. It is buying cash-flowing businesses, that are also real estate, where operational improvement dramatically changes value immediately. Those elements have led to a lot of interest from big money, making this once small asset class one of the fastest growing.

How do I invest with SSSE?

At SSSE, we provide both accredited and non-accredited investors access to tax-advantaged self storage investments with an emphasis on downside mitigation and social stewardship. Our syndications range from acquiring existing value-add self storage facilities to expanding existing facilities, from converting vacant big box stores into self storage to building from the ground up. The first step to investing with SSSE is to fill out our investor onboarding webform. It is quick and easy and can be found on our website SSSE.com by clicking the “Investors” menu link in the upper left corner. Once you have submitted your investor webform, you will have the opportunity to schedule an introductory phone call with one of our investor relations team members. A scheduling program will automatically appear. After that, stay tuned for the next investment opportunity! If we have any active raises occurring that are a good fit for your investor profile, our investor relations team member will let you know on the call and will walk you through getting access to the investor portal. Otherwise, we typically will send out an email whenever there is a new investment opportunity. It will have the high level details including whether it is a 506(b) syndication (for both accredited and non-accredited investors that we have pre-existing relationships with) or a 506(c) syndication (for accredited investors only). There will also be a link to the investment opportunity’s web page! On the webpage will be more details including a short description at the top, followed by buttons to schedule a call, access the investor portal to review the documents, and a video summary. The investment process concludes with accessing the investor portal and signing the subscription documents and wiring funds through the investment portal. Our investor relations team will be there to help every step of the way.

What is an accredited investor?

Often we get asked, what is an accredited vs. a non-accredited investor. We get asked this because only accredited investors can invest in 506(c) syndications. We do both 506(b) and 506(c), so if you’re not yet an accredited investor, if you invest in enough of our 506(b) offerings, you’ll be headed in the right direction. The Securities and Exchange Commission sets the definition of an accredited investor. The definition is subject to change but as of the time of this writing, an accredited investor is someone who meets one of the following 3 requirements. 1. Income. You can be considered an accredited investor if you have a sustained annual income of at least $200,000 as a single investor, or $300,000 total if combined with a spouse’s income. 2. Professional. If you hold a valid Series 7, 65, or 82 license OR are a “knowledgeable employee” of certain investment entities. 3. Net Worth. Excluding the value of your primary home, if you have a net worth of $1 million or more, by yourself or combined with your spouse, you qualify to be an accredited investor. A couple reminders: part of the 506(c) syndication investment process will be verifying that you are an accredited investor, so “fake it til you make it” does not apply. Lastly, I am not an attorney or investment advisor. This information is purely for educational purposes. Please consult your legal and financial counsel for any questions, guidance, or advice.

How much money do I need to invest as a syndication participant?

How much you need to invest as a syndication participant is dependent on the investment opportunity. The syndication sponsors set the minimum investment amount and communicate that to the potential investors. This can be as little as $25,000 but can be much higher. There is often a maximum investment amount as well in order for the syndication sponsors to protect ownership interest so that a single investor does not come in and take over a deal or break a threshold which would require an investor to be a loan guarantor based on their ownership percentage. Each of our syndications at SSSE has the minimum investment and maximum investment established on a deal by deal basis with our lowest minimum investment at $25,000.

What sort of fees do self storage syndicators collect?

Self-storage syndicators typically collect the following fees:

Acquisition fee: A fee charged by the syndicator at the time of acquisition, usually a percentage of the total acquisition cost.

Property management fee: A fee for managing the day-to-day operations of the self-storage facility, typically a percentage of the monthly revenue.

Asset management fee: A fee for overseeing the overall performance of the investment, typically a percentage of the monthly revenue or net operating income.

Development fee: A fee for overseeing the construction and development of a new self-storage facility, usually a percentage of the total development cost.

Disposition fee: A fee charged by the syndicator at the time of sale of the facility, usually a percentage of the sale price.

Performance fee: A fee based on the performance of the investment, usually a percentage of the returns generated by the investment.

Capital calls: A fee charged to the investors to cover unexpected expenses or to provide additional funds for the operation of the self-storage facility.

It's important to note that the fees and their structure vary from syndicator to syndicator and from investment to investment, so it's important to carefully review and understand the terms and fees associated with any self-storage investment opportunity.

What is the difference between a limited partner (LP) and a general partner (GP) in real estate syndications?

In a real estate syndication, the limited partner (LP) and the general partner (GP) are two distinct roles that are critical to the structure and operation of the investment.

Limited Partner (LP): The limited partner is an investor in the syndication who provides capital to the investment. They have limited liability, meaning they are only responsible for the amount they invested and are not responsible for the day-to-day operations of the investment. They receive a share of the profits and distributions, but they do not have a say in the decision-making or management of the investment.

General Partner (GP): The general partner is responsible for the day-to-day management and operation of the investment. They have unlimited liability, meaning they are responsible for any debts or obligations incurred by the investment. They are also entitled to receive a portion of the profits and distributions, but their primary role is to manage the investment and make decisions on behalf of the limited partners.

In a typical real estate syndication, the GP is usually a professional real estate developer or management company that has the expertise and experience to manage the investment effectively. The LP is usually made up of individual investors who want to invest in real estate but do not have the expertise or experience to manage the investment themselves. The GP and LP work together to achieve the investment goals and maximize returns for the limited partners.

What questions should I ask a syndicator?

If you are considering investing in a real estate syndication, it is important to thoroughly vet the investment opportunity and the syndicator. Here are some key questions you should consider asking:

What is your track record and experience in the real estate industry?

What is the investment strategy for the specific property or portfolio?

How is the investment structured and what are my potential returns?

What is the timeline for the investment and expected exit strategy?

How will capital be raised and how will investor funds be used?

What is the risk profile of the investment and how is risk being managed?

Who will be responsible for managing the property and what is their experience?

What is the plan for addressing potential challenges or market downturns?

How will distributions and profits be allocated and paid to investors?

What is the fee structure for the syndicator and any other third-party providers?

What is the current market demand for the specific property type and location?

Are there any potential liabilities or concerns that the syndicator is aware of?

It is important to thoroughly research the investment opportunity and the syndicator, and to consult with a financial advisor before making any investment decisions.