The Economics, Risks, and Opportunities Shaping the Next Development Cycle
For much of the past decade, self-storage development has been driven by a relatively straightforward assumption: identify a growing market, secure a viable site, construct a facility, and position the property to capture increasing demand. While development has never been without risk, favorable financing conditions, population growth, and strong rental performance created an environment where new construction was an attractive strategy for many investors.
Today, that equation has become considerably more complicated.
The self-storage industry is navigating a period of significant adjustment. Construction activity has slowed, financing remains expensive, operating costs have increased, and many markets are still absorbing facilities delivered during the previous development cycle. At the same time, the reduction in new construction is creating an entirely different set of considerations for developers looking ahead to 2027 and beyond.
According to the Radius+ 2026 Forecast, fewer than 500 new self-storage facilities were projected to be delivered in 2026, representing one of the lowest levels of new development since the aftermath of the 2009 financial crisis. With development timelines typically extending 18 to 24 months, the effects of this slowdown are expected to continue into subsequent years.
This creates an interesting tension. The same conditions making development difficult today may also influence the competitive landscape for facilities opening several years from now.
For developers, investors, general contractors, and manufacturers, understanding that relationship is becoming increasingly important. It also raises a question worth examining from multiple perspectives:
Should anyone be building self-storage in 2027?
Radius+ is bringing together experts from across the development process to explore why the answer may depend on much more than market demand or construction costs alone.
The Development Cycle Is Changing, but What Does That Mean for New Projects?
One of the most important considerations for developers entering 2027 is the relationship between current construction activity and future supply.
Unlike many other industries, self-storage cannot respond immediately to changes in market conditions. Identifying a suitable property, conducting feasibility studies, securing financing, obtaining approvals, and completing construction can take years. Consequently, decisions made during one market environment often produce facilities that begin operating under entirely different conditions.
This delay creates a unique challenge when evaluating development opportunities.
The Radius+ 2026 Forecast highlights how rising construction expenses, tightening lending standards, and weaker rental performance have contributed to a substantial reduction in new development activity. These pressures have made it increasingly difficult for projects to achieve the returns necessary to justify construction.
However, fewer construction starts today also mean fewer facilities entering the market in future years.
For developers considering a project in 2027, the relevant question extends beyond whether current market conditions support new construction. They must also consider what the competitive landscape could look like when that facility is completed and begins leasing.
Will existing inventory have been absorbed? How much additional supply will enter the market before opening? Will the surrounding population and local economy support the project’s projected demand?
These are difficult questions to answer using national trends alone.
Some markets continue to work through substantial development pipelines, while others have experienced relatively limited new construction. Understanding these local differences is essential when evaluating how the next development cycle may unfold.
The timing of a project matters, but so does the market in which it is being developed.
Development Feasibility: Is Permission to Build Becoming More Valuable?
Featuring Eric Blum, BMSRGP | Feasibility Study Expert
Before a self-storage facility can begin construction, developers must navigate a process that has become increasingly complicated in many markets: securing the necessary approvals.
Zoning requirements, entitlement procedures, municipal restrictions, environmental reviews, and local opposition can all affect whether a proposed facility moves forward. Even when a project appears financially viable, obtaining permission to build can introduce substantial uncertainty into its timeline.
As these processes become more restrictive or time-consuming, the value of an already-entitled development site deserves closer examination.
Consider two developers evaluating opportunities in the same market. One has a site that has already received the necessary approvals, while the other is beginning the entitlement process. Even if both projects have similar construction budgets and projected returns, their development timelines and exposure to regulatory uncertainty could be significantly different.
In a period when new supply is declining, that distinction may become increasingly relevant.
But holding an entitled site introduces its own considerations. Land carrying costs, changing financing conditions, construction inflation, and shifting demand can all influence the value of waiting versus moving forward.
Developers must determine whether an approval represents an opportunity that should be acted on immediately or an asset whose value could change as the market evolves.
During our upcoming webinar, Eric Blum of BMSRGP will bring the development feasibility perspective to this conversation, examining how entitlement challenges, site selection, and changing market conditions influence decisions about where and when to build.
The discussion will also explore how developers should evaluate their existing pipelines, assess markets with substantial barriers to entry, and account for the time required to bring new facilities online.
For anyone considering a development project in 2027, understanding the relationship between entitlement risk and future supply will be an important part of the conversation.
Construction Economics: Are Developers Rethinking How Facilities Should Be Built?
Featuring [GENERAL CONTRACTOR NAME], [COMPANY] | [TITLE]
Securing a viable site is only one part of the development process. The next challenge is determining whether the facility can be constructed at a cost that supports the project’s financial objectives.
Construction economics have changed considerably in recent years.
Labor expenses, material prices, tariffs, financing costs, and project timelines have introduced additional pressure into development budgets. Even relatively small changes in construction assumptions can have significant implications for a project’s overall feasibility.
According to the Radius+ 2026 Forecast, the combination of rising wages and material costs has pushed total project budgets higher, with some developments experiencing costs 15% to 25% above comparable expectations from two years earlier.
At the same time, rental rates have not consistently increased enough to offset these expenses.
This creates a difficult environment for developers attempting to balance construction quality, project timelines, and long-term financial performance.
It also raises questions about whether the industry’s approach to facility design needs to evolve.
Historically, developers have often customized building layouts to maximize the use of individual parcels or accommodate specific market requirements. While these designs can provide advantages, customization may also introduce additional engineering requirements, procurement complexity, and construction costs.
Standardized building designs offer a different approach, potentially allowing developers and contractors to work with more predictable material requirements, established suppliers, and repeatable construction processes.
However, self-storage projects rarely operate under identical conditions. Differences in land configurations, local regulations, climate, and customer preferences can all influence design decisions.
Determining where standardization creates efficiencies and where customization remains necessary is an important consideration for development teams.
During the webinar, [GENERAL CONTRACTOR NAME] of [COMPANY] will examine these challenges from the general contractor’s perspective.
The conversation will explore how construction costs are affecting new development, which expenses are creating the greatest challenges, and how project design influences budgets and completion timelines.
We’ll also discuss the economics of ground-up construction compared with converting existing commercial buildings into self-storage facilities.
As developers evaluate projects for 2027, understanding how construction decisions affect both initial investment requirements and long-term property performance will remain essential.
The Manufacturer’s Perspective: Are We Thinking Far Enough Beyond Construction?
Featuring Brad Kerns, SteelBlue | Roll-Up Door & Hallway System Manufacturer
While development feasibility and construction expenses often receive the most attention during the planning process, a facility’s financial performance depends on what happens after construction is complete.
Operating expenses can significantly affect profitability, particularly when rental rates are under pressure or lease-up periods extend beyond initial projections.
This is creating a growing conversation around the technologies and building systems incorporated into new self-storage developments.
Smart locks, connected access gates, security cameras, and sensors are changing how facilities can be monitored and managed. These technologies may allow operators to automate certain processes, reduce dependence on on-site staffing, and gather more detailed information about facility activity.
For developers, however, the relevant considerations extend beyond whether these technologies are available.
When should they be incorporated into a project? How much additional upfront investment do they require? What operating efficiencies can they realistically deliver? And how might those efficiencies influence the property’s value over time?
These questions are particularly relevant as the industry continues exploring remotely managed facilities, centralized operations, and more technology-enabled management models.
A building designed around traditional operating requirements may have a very different expense structure than one developed with connected systems integrated from the beginning.
However, incorporating additional technology also introduces questions about maintenance, reliability, system compatibility, and eventual replacement costs.
Developers must consider how these investments fit into the overall economics of the property rather than evaluating individual products in isolation.
Brad Kerns of SteelBlue, a manufacturer specializing in roll-up doors and hallway systems, will join the webinar to discuss how building systems and operational technology are influencing the next generation of self-storage facilities.
The conversation will examine how connected hardware is being incorporated into new developments, the operational challenges these systems are intended to address, and whether technology-enabled facilities could create meaningful differences in long-term ownership costs.
For developers planning facilities that may operate for decades, these considerations raise an important question about how early design and manufacturing decisions influence the economics of the finished asset.
Building vs. Buying: A Different Way to Evaluate Development Opportunities
Beyond the individual challenges associated with development, construction, and operations, another consideration is becoming increasingly relevant: the availability of existing self-storage properties.
When construction costs rise, the financial relationship between developing a new facility and acquiring an existing one can change.
Some institutional owners are evaluating opportunities to sell relatively new facilities that have not yet reached stabilization. For prospective buyers, these properties may offer an alternative to taking on the full timeline and uncertainty associated with ground-up development.
This creates a different set of investment considerations.
A newly constructed facility may offer modern building systems, a customized unit mix, and the ability to enter a specific market. An existing facility may offer a shorter timeline to ownership, established operating history, or an acquisition price below current replacement cost.
Each approach carries risks that require careful evaluation.
For example, acquiring a property that is still in lease-up may reduce certain development risks while introducing questions about occupancy, pricing, operating expenses, and the property’s ability to achieve stabilization.
Alternatively, developing a new facility may offer greater control over location and design but require investors to make assumptions about market conditions several years into the future.
The challenge is determining how these different factors affect the economics of each opportunity.
During the webinar, our panel will examine this building-versus-buying dilemma through the perspectives of professionals who understand different aspects of bringing a facility to market.
The discussion will explore how development approvals, construction costs, technology investments, and future operating performance influence the decision to pursue a new project or acquire an existing property.
Why the Three Perspectives Need to Be Part of the Same Conversation
One of the challenges with evaluating self-storage development is that the process is often examined in separate stages.
Developers focus on land acquisition, entitlements, financing, and feasibility. General contractors concentrate on building specifications, material costs, scheduling, and construction execution. Manufacturers evaluate the physical systems that influence how a facility is built and eventually operated.
Yet the decisions made within each stage affect the others.
A particular building design may reduce construction costs but introduce higher operating expenses. Additional technology may increase the initial development budget while creating opportunities for labor savings. An already-entitled site may provide a scheduling advantage but still require careful evaluation of construction costs and future demand.
For a project to succeed financially, these considerations cannot be evaluated independently.
This is especially important in an environment where development margins are under pressure and assumptions about future rental performance remain uncertain.
A development team may identify a market with favorable supply projections, but that opportunity must still be evaluated against construction expenses, operational requirements, financing conditions, and expected returns.
The upcoming Radius+ webinar will bring these perspectives together to examine how decisions throughout the development process influence one another.
Rather than focusing on a single component of the industry, the discussion will consider what developers, contractors, manufacturers, and investors need to understand about the broader economics of bringing new self-storage facilities to market.
Why 2027 Deserves a Closer Look
The self-storage industry is experiencing a period in which several important trends are unfolding simultaneously.
New development activity has slowed substantially. Markets are absorbing different levels of recently delivered inventory. Construction and financing expenses remain important obstacles, while advances in facility technology are changing expectations around operational efficiency.
These developments are creating new considerations for investors evaluating where to allocate capital.
But the effects are unlikely to be consistent across every market or development strategy.
A project that appears attractive in one location may face entirely different conditions in another. A standardized building design may offer meaningful efficiencies for one developer while being less practical for another. Technology investments may influence long-term operating costs differently depending on facility size, management structure, and customer requirements.
This is why understanding the individual factors shaping development decisions is just as important as understanding the broader industry outlook.
The question of whether anyone should be building self-storage in 2027 deserves more than a simple yes or no.
It requires a closer examination of market fundamentals, entitlement timelines, construction economics, operational technology, and the alternatives available to investors.
And those are exactly the conversations we’ll be having.
Join the Conversation: Should Anyone Be Building Self-Storage in 2027?
Radius+ is bringing together industry experts for a 45-minute webinar examining the economics, risks, and opportunities shaping the next self-storage development cycle.
Featuring Eric Blum of BMSRGP and Brad Kerns of SteelBlue, the discussion will explore the challenges facing developers in 2027 and the considerations that could influence investment decisions for years to come.
Using Radius+ market intelligence alongside real-world expertise, we’ll examine how changing supply conditions, development feasibility, construction strategies, and connected building systems are reshaping the conversation around new development.
Whether you’re holding an entitled development site, considering a new construction project, evaluating an acquisition, or simply looking to better understand where the industry may be headed, this webinar offers an opportunity to hear directly from professionals working across the development process.
Webinar: Should Anyone Be Building Self-Storage in 2027?
Date: Thursday, October 22, 2027
Time: 4 PM EST
Duration: 45 Minutes
Be a part of the conversation; register for the webinar