Americans Went All-In on Self-Storage. That Demand Is Suddenly Cooling.

Peter Chu, a retired lawyer living in Portland, Ore., pays nearly $400 a month for his storage unit in Seattle, where he used to live. That rate has gone up by roughly $150 since 2022.

Mr. Chu is caught in an industry that was booming a few years ago during the coronavirus pandemic but now finds it has built way too many rental units. As the industry cuts so-called street rates to entice new customers, its existing customers are paying substantially higher rates that are sometimes raised twice or more in a year.

The demand for self-storage cooled right as a glut of new supply hit the market, particularly in cities like Phoenix and Atlanta, said Tyson Huebner, the director of research at Yardi Matrix, a division of the property-management software firm Yardi.

“It was really attractive in the moment, but as soon as you go through planning, building, by the time you deliver, you’re kind of in a different market,” he said.

Many developers, spurred by the pandemic to invest money in new self-storage facilities, have been caught short by this drop in demand. In Sun Belt markets, where much of the self-storage spaces have been built over the past couple of years, falling rental rates combined with climbing construction and financing costs have prompted some developers to walk away from projects entirely.

According to SpareFoot, an online platform where people can search for storage units, the average monthly rent for a unit in the United States was $85.14 as of March, down from $108.58 two years earlier.