Dream Storage Newsletter - June 2025

Monthly Newsletter

As we close out June, we take a moment to recognize that we are already halfway through the year. This midpoint offers a natural opportunity to reflect on what has transpired so far and consider what it means for the months ahead. In this edition, we review key industry developments from the first half of the year and explore how they are shaping expectations for the remainder of 2025.

Market Insights

It is hard to believe we are already halfway through 2025. Many brokers and buyers are once again navigating a somewhat sluggish year for transactions. Institutional and private equity-backed buyers remain active and eager to grow their portfolios. While some brokers are finding success in bringing deals to market and receiving attractive bids, a common refrain is that many buyers are difficult to pin down or hesitant to commit when it comes time to submit an offer.

One encouraging trend is a narrowing gap between street rates and achieved rental rates. This shift allows buyers to more accurately assess a market’s true near-term potential. Whether due to REITs pulling back on their formerly aggressive Existing Customer Rate Increases (ECRIs) (either voluntarily or due to pressure from customers or legislation) buyers are now able to more confidently underwrite potential property performance.

Additionally, 24 of the top 30 metros saw modest increases in advertised street rates per the latest Yardi Matrix report (linked below). Many industry observers see this as an indication that street rates have bottomed out and may be poised for steady growth. On the development side, the nationwide self-storage supply forecast predicts a 19% drop in new construction for 2025, followed by an 18% decline in 2026, and a 9% drop in 2027, signaling a general slowdown in new supply.

The Federal Reserve's decision to hold interest rates steady while leaving the door open for potential cuts later in the year reflects ongoing uncertainty. The Fed appears to be in a wait-and-see mode, watching to see how tariffs and labor market conditions affect inflation. Some buyers are adopting a similar approach and are choosing to delay acquisitions in hopes of improved borrowing conditions. Others (mostly larger buyers) are accepting the current rate environment and taking a longer-term investment view.

Dream Storage’s Outlook

Next month, Rachel will attend an industry conference known for its high-level panels led by some of the most influential executives in the industry. The event offers valuable insights into how major players are responding to today’s economic landscape and adapting their strategies for improved performance. Often, the trends set by these companies shape broader market behavior, as others follow suit to remain competitive.

We look forward to sharing highlights and key takeaways from the conference in next month’s newsletter.

As always, thank you for your continued support.

Dream Storage