Self Storage — The Investment That Grows When Life Gets Hard

When I tell people we invest in self-storage, I usually get one of two reactions. The first is a raised eyebrow. That's a real investment? Yes. It's one of the most consistently durable asset classes in commercial real estate. And the second is curiosity. Why storage? And that question has a very specific answer. Self-storage is not driven by the economy. It's driven by life. And life keeps happening regardless of what the market does. Most real estate demand goes up when the economy is strong and softens when conditions get harder. People upgrade their apartments in good times and pull back in difficult ones. Self-storage doesn't work that way. The demand drivers for storage are life events, and life events are not cyclical. People need storage when they move, when they downsize, when they go through a divorce, when a parent passes away and the family is clearing out in the state, when they change jobs and relocate. When a business transitions, when they're in between one chapter of life and the next. Now think about what happens during economic disruption. Divorce rates rise, job losses create relocations, people consolidate households, estates get settled faster, businesses downsize their footprints. The same events that create economic stress also create storage demand. The National Association of Real Estate Investment Trusts has reported that self-storage demand is often considered recession-resistant precisely because demand drivers exist in both strong and weak economic environments. Some analysts describe self-storage as countercyclical, meaning demand can actually increase during periods of economic disruption rather than falling with it. Self-storage is also one of the most operationally efficient asset classes in real estate. There's no tenants in the traditional sense, no kitchens to repair, no lease-up timelines that depend on unit-by-unit improvements, and no complex tenant relationships to manage. The average well-run self-storage facility operates with a lean team, dynamic pricing technology, and relatively low overhead compared to most property types. National average storage rates were approximately $136 per month as of late 2025, according to RentCafe data. And operators can just adjust pricing dynamically as occupancy shifts. That flexibility means a well-managed facility can respond to local market conditions faster than almost any other real estate type. And I want to add one more thing here that I think gets overlooked. Self-storage has historically carried some of the lowest leverage ratios in commercial real estate. That means operators in this space tend to run lean balance sheets with less debt relative to asset value. In high-rate environments, when heavily leveraged real estate operators are under pressure, Well-capitalized self-storage operators tend to be insulated. That structural conservatism is by design. That asset class has held up across cycles in a way that more leveraged sectors have not. The sector also historically carries some of the lowest leverage ratios in commercial real estate. That structural conservatism creates resilience in high-rate environments and protects operators when financing markets tighten. Here's something important about where self-storage stands right now. New supply is declining. According to Storage Cafe, 59.3 million square feet of new self-storage space was planned for 2025. 7.9% less than the prior year. Higher construction costs and tighter financing have slowed new development across the sector. And when supply tightens and demand remains stable or increases, Fundamentals improve for existing well-located properties. That's the current setup in many of the markets we operate in. We focus on markets where demand is consistent and supply discipline is strong. We look for fragmented ownership, smaller operators who have strong locations but have not applied institutional quality management practices to their facilities. When we bring in technology, dynamic pricing, automated access, streamline operations, we can move a facility from average performance to strong performance. Strong performance relatively quickly. And unlike apartment renovations, you're not managing tenant displacement or complex multi-year construction timelines. The result is an asset class that generates consistent cash flow, requires less management intensity than multifamily, and has a demand driver that exists independent of what the economy is doing. Self-storage is not what most people picture when they think about where their investment is at work. But once you understand that demand is driven by life events rather than the economy, and that life events often increase during difficult periods rather than slow down, it becomes one of the most logical pieces of a needs-based portfolio. It passes our necessity test. People will need storage in a recession. People will need it in a boom. The triggers for demand are human, not cyclical. And that's exactly why it's part of the foundation behind your Freedom Notes investment. In our next video, we talk about build-to-rent housing and why America has become a nation of long-term renters. Go to chatwithfreedom.com to learn more about what is behind your investment and how we think about each asset class. I hope this was helpful, and I hope we have the opportunity to work together.