Dream Storage Newsletter - April 2025

Monthly Newsletter

In our April newsletter, we share key industry insights from brokers and owners following Rachel’s attendance at the ISS 2025 Spring Conference in Vegas earlier this month.

Market Insights

Several topics consistently came up in my conversations with brokers, owners, operators, and vendors at the ISS show last week.

First, many industry players have their sights set on a newly proposed rent control bill that directly targets storage facilities: California’s SB709. As it is written today, this bill would prohibit the owner of a self-storage facility from increasing the gross rental rate for a storage unit by more than the lower of 5% plus the percentage change in the cost of living, or 10%, over the course of any 12-month period. The California Self Storage Association continues to fight the bill with the financial backing of the REITs and other key players in the industry. While this bill is state specific, California often sets a precedent that other states follow. If this bill passes, the effects may take time to materialize, but it could have nationwide implications as legislators begin to crack down on aggressive pricing practices by storage operators. The next hearing is scheduled for May 6th and you can track the bill’s progress using the link below.

Second, many operators believe rental rates are beginning to stabilize in certain markets. Unfortunately, this stabilization is being offset by rising labor costs, inflation, and increased marketing spend. While many operators feel more confident in their ability to forecast revenues, they must now focus on managing what feels like a daunting rise in operating expenses.

Last, developers in the storage space remain hungry for their next development opportunity. But, many markets are struggling to absorb the last wave of development. Many developers have been forced to sit on the sidelines due to prohibitively expensive debt and rising material costs. If either pressure eases, will cities that were previously welcoming to new storage projects ultimately suffer from oversupply (and will they ever fully recover)?

Dream Storage’s Outlook

Over the next few days, the REITs will release their Q1 earnings and host conference calls wherein they will share valuable insights as to how they are navigating market challenges within the storage industry and how they plan to adjust their strategies going forward. The strategies of the REITs often influence broader industry trends, which in turn influence our own underwriting and strategic decisions. We will be sure to dive into these reports and calls in our next newsletter. The market remains challenging, but we remain committed to uncovering interesting investment opportunities.

As always, thank you for your support.

Dream Storage