14 Jul 2025
City skyline or cul-de-sac? One offers premium rents and constant foot traffic; the other, lower costs and untapped growth. As self-storage booms in 2025, where you invest could make all the difference.
Urban and suburban markets each tell a different story, one shaped by density and demand, the other by affordability and expansion. Using detailed self storage data, investors can better understand these dynamics as population patterns shift and remote work continues to reshape where and how people live. Should you bet on the vertical, high-yield promise of downtown real estate, or ride the suburban wave where land is cheap and square footage stretches further?
The answer isn’t black and white but the differences are measurable.
Urban areas, with their high population densities and increasingly compact living spaces, have become prime markets for self-storage demand. As urbanization accelerates and housing units shrink, especially in major cities, residents often lack adequate space for seasonal items, furniture, or business inventory. This has led many urban dwellers, particularly young professionals, to rely on self-storage units as essential extensions of their homes. Industry research supports this trend, noting that limited residential storage and constant population turnover in cities consistently drive higher utilization rates of storage facilities.
To identify which urban markets show the strongest fundamentals and rental growth, leverage Radius+ for city-specific self storage data and insights.
High Occupancy Rates: Urban self-storage facilities tend to maintain high occupancy thanks to the steady churn of residents and businesses moving in and out of city centers. According to industry reports, occupancy rates in urban areas can exceed the national average of 85%
Premium Rental Rates: Urban self-storage facilities often command higher rental rates due to limited space and high demand. For instance, in January 2025, the average cost for a 10x10 non-climate-controlled storage unit was $254 per month in New York City and $275 in San Francisco, significantly above the national average of $122. This scarcity of available space in densely populated urban areas allows operators to charge premium rates
High-Turnover: Urban self-storage facilities benefit from a younger, more transient population. In metropolitan areas, 59% of self-storage tenants are millennials or younger, compared to 47–48% in suburban and rural markets. These younger tenants are more likely to rent units for shorter durations, often under three months, and visit their units more frequently, with 20% of Gen Z renters and 16% of millennials visiting at least once a week. This high turnover and frequent usage create a steady demand for storage units in urban settings
Challenges: Despite the advantages, urban self-storage investments come with challenges such as higher land acquisition costs, stringent zoning regulations, and increased competition. Developers often resort to multi-story class A facilities to maximize space utilization
Suburban self-storage demand is surging, fueled by shifting lifestyles and economic trends. As remote work enables more people to move away from dense urban centers, suburban and exurban communities are growing rapidly. This migration is coupled with a rise in multifamily housing and smaller lot sizes, mirroring urban living conditions and driving a need for accessible storage solutions. Suburban areas are becoming denser and more vertical, increasing the appeal of self-storage. Together, these factors are turning the suburbs into fertile ground for self-storage investment.
Use Radius+ to identify the best suburban markets and optimize your investment strategy with real-time data and insights.
Growing Demand: Suburbs are witnessing increased densification, with more multifamily residences and smaller lot sizes. This shift mirrors urban living conditions, leading to a rise in self-storage needs
Lower Operational Costs: Suburban land is significantly cheaper, averaging around $300,000 per acre versus up to $1.5 million in urban areas, allowing for larger, simpler self-storage builds. With lower development costs and fewer zoning hurdles, suburban projects often offer stronger profit margins.
Demographic Appeal: Suburban self-storage facilities attract a diverse clientele, including families, small business owners, and individuals seeking affordable storage solutions. Major operators have noted an increase in suburban clientele, with Extra Space Storage's share of "Wealthy Suburban Families" rising from 9.1% to 10.1% between 2019 and 2025.
Challenges: While suburban areas offer lower land costs, they are increasingly facing oversupply issues. The influx of new facilities can saturate the market, leading to heightened competition and potential price wars. Operators may resort to offering significant concessions, such as one or two months of free rent, to attract tenants. This aggressive competition can compress profit margins and make it challenging for new entrants to achieve projected rental rates.
| Factor | Urban | Suburban |
|---|---|---|
| Occupancy Rates | High, often exceeding national averages | Increasing, with strong growth potential |
| Rental Rates | Premium rates due to high demand and limited supply | Competitive rates with room for growth |
| Development Costs | High land and construction costs | Lower costs, allowing for larger facilities |
| Regulatory Hurdles | Stringent zoning laws and regulations | Generally more favorable regulatory environment |
| Clientele | Urban residents, students, and businesses | Families, small business owners, and remote workers |
| Growth Potential | Limited by space constraints and saturation | High, driven by population migration and housing trends |
| Demographics | Younger, more transient renters (e.g. Gen Z and Millennials) | Broader age range more stable long-term users |
| Tenant Turnover | Higher turnover- frequent, short-term renters drive consistent demand | Lower turnover- longer-term users but less frequent unit visits |
| Risk Factors | Higher barriers to entry but stronger pricing power | Risk of oversupply and price wars due to rapid development |
Both urban and suburban self-storage investments present compelling opportunities, but the best choice depends on your strategy and risk tolerance. Urban facilities benefit from high demand, premium rental rates, and a younger, transient customer base that drives consistent unit turnover. However, they come with steep development costs and regulatory hurdles. On the flip side, suburban storage offers lower land costs, larger facilities, and long-term growth potential fueled by shifting demographics and housing trends. But rapid expansion in these areas also brings the risk of market oversaturation and pricing competition.
Investors seeking short-term cash flow and steady demand might favor urban sites despite higher barriers to entry. Those playing the long game may find suburban markets more scalable, but only with careful due diligence to avoid crowded submarkets.
Whether you're eyeing premium rents in the city or scalable growth in the suburbs, your investment strategy is only as strong as your self storage data. Radius+ gives you the tools to analyze occupancy trends, rental rates, demographic shifts, and development pipelines all in one intuitive platform.
