I spent last week at SSA in Las Vegas, but this year, instead of staying near the booth, I spent both days in private conversations with groups from across the industry. Most of the fifteen-minute meetings ran thirty or forty. A few themes came up enough times to be more than one-offs.
The middle market is debt-constrained, but investors are getting creative to close deals.
The middle market is constrained right now. Refinancing is expensive, and acquisition financing is often harder to assemble than the deal itself. Regional lenders can be costly, and many of them are still unfamiliar with self-storage as an asset class, which limits a group’s debt options unless they have enough scale to access the top lenders in the space, and plenty of groups don’t.
A lot of 2022 and 2023 vintage deals underwrote lease-up assumptions that made sense at the time and are now hitting maturity in a very different rate environment than the one they penciled in.
What was interesting is how deals are still clearing. Many of the ones getting over the line involve the seller staying in, whether through seller financing, retained equity, or a structured earnout. As traditional bank debt gets more expensive, the counterparty becomes the source of capital.
Asking rates are a signal, but operating data is where investors get conviction.
Third-party management is hypercompetitive, and the pitch has shifted as well. Operators are not winning contracts on just their ability to run a facility anymore. They are winning on their ability to explain the nuance of a local market better than the other bidder, and that is a big part of why we have seen smaller and mid-sized management groups take bids away from the REITs.
In a soft market, owners are also asking for a lot more transparency. Nobody is going to care about a property more than its owner, and management groups are increasingly being asked to explain their decision-making, particularly around how they are setting asking rates.
Ownership is moving in the same direction. Development has slowed, and the attention has turned to stabilizing what is already built and leasing. Web rates will tell you a consumer is willing to pay to enter the unit, but they will not tell you what’s being absorbed. That gap shows up mostly on multi-story suburban products, where an underwrite can look clean and still miss badly on timing if you do not have good historical lease-up data to give confidence around your projections. A good manager knows to lease a building from the top down so the upper floors do not sit vacant, because demand will always skew toward the accessibility of first-floor and drive-up units.
The AI conversation has evolved.
AI came up constantly, but almost nobody asked what it could do. The questions were about how it gets governed, where a number came from, whether it holds up in front of an investment committee, and who owns it when the output is wrong.
Reactions were still mixed, particularly among investors, which is fair. But capability was never really the constraint. Accountability, governance, and lineage are.
Capital is harder to come by, deals are requiring more discipline, and the bar for what counts as a defensible decision has gone up. That is a healthy shift for the industry even if it makes the next twelve months more work.