Staying Competitive in 2025: How Small Operators Can Outmaneuver Self-Storage REITs

In 2025, self-storage Real Estate Investment Trusts (REITs) are navigating a shifting landscape marked by stabilizing rental rates, evolving occupancy strategies, and technological advancements. As the market recalibrates post-2020, REITs are adopting innovative approaches to maintain competitiveness against smaller operators.

To bolster occupancy, REITs are implementing dynamic pricing models and targeted promotions. Street rates have declined by 2.5% year-over-year to approximately $1.38 per square foot, while online rates have seen a 5.4% drop to $1.14 per square foot, reflecting aggressive digital pricing strategies.

The trickle-down effect of REITs implementing aggressive digital pricing and targeted promotions puts significant pressure on smaller operators to either match or justify higher rates, often without the same economies of scale. As REITs lower street and online rates, especially in competitive markets, price-sensitive tenants may gravitate toward these larger, branded facilities. This forces smaller operators to either:

1. Lower their rates, which can hurt margins, especially if they lack the automation and cost-cutting technologies REITs use to maintain profitability.
2. Differentiate through service, by offering a superior customer experience, local loyalty programs, or niche features like flexible access or community partnerships.
3. Invest in digital tools, like dynamic pricing engines and online rentals, to stay relevant and visible in competitive search-driven environments.
4. Risk higher vacancy rates, particularly in saturated or urban markets where REITs dominate search rankings and dominate ad spend.

In short, while pricing pressure is increasing, smaller operators can still compete by playing to their strengths: nimbleness, personalization, automation, and local brand equity, rather than trying to out-discount the REITs.

Technological Integration is the Path Forward

Embracing technology, REITs invest in automation to streamline operations and improve customer service. Features such as mobile apps, digital access controls through gates and locks, and contactless services are becoming standard, catering to the preferences of tech-savvy consumers. Automation not only enhances convenience but also reduces operational costs, allowing REITs to offer competitive pricing. By offering lower rental rates averaging $208 per month, which is 13% less than non-REIT facilities in specific markets, they attract cost-conscious consumers and thus force the hand of smaller operators to take a serious look at their current business strategies.

For instance, Life Storage's "Rent Now" platform integrates with its operating and revenue-management systems, enabling real-time inventory and sales management and thus improving efficiency and customer satisfaction.

Additionally, REITs are expanding their portfolios through acquisitions and joint ventures, increasing their market share and operational efficiency. Extra Space Storage continues to pursue acquisitions, with a 2025 guidance of $325 million focusing on joint ventures to mitigate capital costs. This strategy enables REITs to penetrate new markets and consolidate their presence in existing ones, posing a significant challenge to smaller operators.

What Can the Small Guys Do?

As the self-storage industry stabilizes, REITs are well-positioned to capitalize on emerging trends. Their adoption of technology, strategic pricing, and expansion efforts are key to maintaining high occupancy rates and competitive advantage. While challenges persist, including market saturation and economic fluctuations, REITs' proactive strategies suggest a resilient and adaptive approach to the evolving self-storage landscape.

To compete with REITs, smaller self-storage operators must double down on personalization, agility, automation, and community engagement. While REITs may dominate in scale and pricing, independents can differentiate by offering hybrid-local customer service via remote managers, 24/7 support hours, building strong tenant relationships, and leveraging nimble decision-making to adapt faster to market changes. Investing in smart, affordable technology such as digital rentals, automated access, and responsive communication tools can level the playing field operationally. Most importantly, smaller operators should emphasize their unique brand identity, tap into local marketing channels, and focus on value-added services that big-box competitors often overlook. In today’s market, being small can still mean being mighty.

Mason Shaw is the Operations Manager for American Storage South, which owns facilities in the surrounding Charlotte area. In addition, she is the Product and Sales Manager for KISS Solutions. A software solutions company she helped co-found with Robert Kapp, Owner of American Storage South. KISS Solutions offers automation and technology platforms to help run the daily operations of self-storage facilities. For more information about KISS Solutions, email team@kisssolutionsusa.com . To reach out to Mason, email her at mason@kisssolutionsusa.com