Joe Downs: Why Are Investors Moving Into Self-Storage?

Real-estate investing often begins with something familiar.

You buy a house. You understand what a kitchen is worth, what tenants expect and roughly what another house down the street costs. Residential property feels accessible because most people have lived in it long before they consider investing in it.

But familiarity can also create a blind spot.

What if the more interesting opportunity is the property most people barely notice while driving past it?

For Joe Downs, that question began with a statistic about self-storage ownership. When he first investigated the sector around 2016, he encountered an industry that was far less institutionalized than he expected.

“The hook that got me into self-storage was… 80% of all self-storage facilities were owned by mom-and-pop investors,” Downs recalls.

The precise ownership mix has evolved since then, and current data requires more nuance. StorageCafe estimates REITs now control about 30% of U.S. self-storage inventory, leaving the majority with non-REIT companies and independent operators. Its analysis of 2025 transactions likewise describes smaller operators and independent owners as an important backbone of the sector.

That continuing fragmentation matters because it creates something entrepreneurs understand instinctively: variation.

Variation in management. Variation in pricing. Variation in marketing. Variation in technology. And, potentially, variation between what an asset earns today and what a better-operated version could earn tomorrow.

Why Is Self-Storage Different From Residential Real Estate?

Downs began in residential property himself, so his argument is not that houses or apartments cannot create wealth.

His point is that investors frequently underestimate the operational burden they are buying.

A residential unit contains kitchens, bathrooms, appliances, flooring, plumbing and living space that must be restored between tenants. It also creates a landlord-resident relationship governed by substantial state and local regulation.

Storage changes that equation.

A basic storage unit is comparatively simple. When a customer leaves, Downs reduces the contrast to an almost comically simple image:

“What do we do in self-storage? We sweep it out. It’s a broom.”

That does not make self-storage effortless. Facilities still require maintenance, security, insurance, marketing, pricing, collections, financing and competent management.

But the operating system is different.

There is another distinction: tenant concentration.

Downs asks listeners to compare a hypothetical $1 million multifamily property containing ten apartments with a self-storage property containing perhaps 100 units. Losing one apartment tenant would affect 10% of the units in the first example. Losing one storage customer would represent 1% in the simplified second example.

The actual economics depend entirely on the property, rents, financing and occupancy. But the underlying idea is useful: smaller rentable units can distribute revenue across a larger customer base.

Fragmented Ownership Creates a Value-Add Opportunity

The U.S. self-storage market is hardly a hidden cottage industry.

The Self Storage Association says the sector now includes more than 64,000 facilities and generates more than $61 billion in revenue.

Consumer penetration has also risen. The association's 2025 Demand Study found that 16.7 million U.S. households rented storage in 2024, equivalent to 12.6% of households, up from 9% in 2013.

Yet significant independent ownership remains alongside increasingly active institutional capital.

That combination is important.

It means the opportunity is no longer that sophisticated investors have somehow failed to discover self-storage. They clearly have not. Instead, the opportunity may exist where an individual asset is still being operated below contemporary standards.

Downs describes acquisitions where value creation may involve improving a gate, lighting or security, building a website, introducing better marketing or professionalizing management rather than performing extensive interior renovations.

This is classic value-add entrepreneurship: find an existing productive asset and improve the system around it.

CBRE has identified fragmented ownership as one reason self-storage can create opportunities to acquire underperforming assets and improve their operational standards.

And investors are actively pursuing the sector. U.S. self-storage transaction value reached nearly $5 billion in 2025, up 39% from 2024 according to StorageCafe's analysis of Yardi Matrix data.

Fragmentation therefore creates opportunity—but also competition.

The Opportunity Is Bigger Than Rows of Storage Doors

One of Downs' more interesting observations is that learning self-storage can expose an investor to several adjacent businesses.

“Self-storage is what brought you here, but it’s all the other niches in storage that’ll make you just as wealthy,” he says.

He points to several:

• boat and RV storage;

• business-oriented “pro storage”;

• industrial outdoor storage;

• truck and fleet parking;

• specialty or valet storage; and

• small-bay flex space.

These are not interchangeable assets, and each comes with different zoning, customer, financing and operational requirements.

But the common thread is changing demand for space.

E-commerce and faster distribution require inventory and vehicles closer to customers. Contractors need locations for equipment and fleets. Small companies need flexible warehousing. Trucks need regulated parking locations.

Industrial outdoor storage illustrates how far this theme extends. CBRE reported in 2026 that industry participants estimate less than 10% of the U.S. IOS universe is institutionally owned, illustrating another highly fragmented real-estate niche attracting professional capital.

The larger entrepreneurial lesson is not “buy every kind of storage.”

It is to watch what economic changes force people and businesses to store, park or distribute differently.

What Should First-Time Self-Storage Investors Actually Evaluate?

A fragmented market does not automatically make a facility attractive. Neither does simple physical construction.

Investors still need to ask fundamental questions:

Is there real local demand?

National demand statistics cannot rescue a property in an oversupplied micro-market.

What occupancy is sustainable?

A full facility can signal strong demand—or prices that are too low.

Where does the value-add actually come from?

A new website is valuable only if poor marketing is genuinely suppressing performance.

What capital expenditure is hidden?

Roofs, drainage, paving, gates, security and deferred maintenance can rapidly change acquisition economics.

Who are you competing against?

An independent facility next to sophisticated operators with dynamic pricing and aggressive digital marketing is a different proposition from an under-managed property in an underserved market.

Does the deal still work without heroic assumptions?

That final question may be the most important.

Downs describes his educational approach as “bowling with bumper rails”: learning not merely how to close a deal, but how to avoid buying something that should never have been purchased.

The distinction matters. Finding a promising industry is not the same as finding a promising investment.

Self-Storage Is Becoming More Professional, Not Less Interesting

Institutional ownership is increasing. Technology is improving. Professional management is spreading. And transaction activity has recovered.

Yardi Matrix reported that self-storage investment activity strengthened during 2025, while advertised rents began showing modest year-over-year growth again after a prolonged period of declines.

That can make entry more difficult. It can also make the remaining operational gaps more valuable.

For entrepreneurs, the compelling part of self-storage may therefore be neither the garage doors nor the real estate itself.

It is the gap between an asset that exists and a business that has been professionally operated.

What Should You Do This Week?

If you already invest in residential real estate, choose one self-storage facility in a market you understand and study it as a business—not as a building.

Look at its website. Pricing. Reviews. Access. Security. Competition. Unit mix. Visibility. Nearby population. Nearby development.

Then ask one question:

If I owned this tomorrow, exactly what would I improve—and why would that improvement create economic value?

If the answer is unclear, you have learned something useful without spending a dollar.

Joe Downs explored these questions on 21st Century Entrepreneurship, where his larger message extends beyond storage: sometimes the most interesting entrepreneurial opportunity is hiding inside an ordinary asset that everyone else has learned to drive past.