For decades, the self-storage industry has relied on a simple rule of thumb: a healthy market should have about eight square feet of storage space for every resident in a given area. The formula has guided billions of dollars in development and investment decisions, offering a quick way to gauge whether a market is underbuilt or oversupplied.
But that benchmark no longer reflects how people actually use storage. What once served as a reliable proxy for demand now overlooks major shifts in competition and consumer behavior. Portable storage pods, trailer rentals, and storage condominiums meet many of the same needs as traditional storage, without showing up in traditional feasibility models. Population counts, meanwhile, miss the seasonal and transient populations that drive true demand in college towns, resort areas, and vacation-home markets.
Investors who keep trusting the old ratio risk misunderstanding both demand and value. Feasibility studies that once offered confidence may now conceal real exposure, and lead to costly mistakes in markets that look solid only on paper.
The Old Rule
The eight-square-feet-per-capita rule took hold in the early 2000s, when the self-storage industry began to scale nationally and institutional investors demanded consistent benchmarks. Developers and lenders needed a fast way to compare markets, and population data offered a simple solution. If an area had less than about eight square feet of storage per resident, it was considered underbuilt; if it had more, the market was likely saturated.
For decades, the ratio held up surprisingly well. It provided lenders, developers, and investors with a consistent way to compare markets across regions and economic cycles. As long as population growth tracked roughly with household formation and consumer demand for storage, the math worked.
But the rule also assumed that self-storage demand was tied directly to where people lived. That assumption made sense when storage meant a fixed facility with rows of roll-up doors serving a local customer base. Today, that’s no longer the case. Consumers have more ways than ever to store their belongings, many of which don’t depend on permanent, site-based facilities. The result is that the old benchmark can no longer be trusted to tell the whole story. It may still be a starting point, but it’s no longer a reliable indicator of market health or investment potential.
The Blind Spot
Over the past decade, a new set of storage competitors has emerged, offering storage options that meet the same needs without resembling traditional facilities in any meaningful way.
Portable storage pods are the most visible example. A customer can have a container delivered to their driveway, load it at their own pace, and either keep it on-site or have it hauled to a warehouse. The model serves both residential movers and long-term renters. But because the storage itself often takes place off-site, sometimes miles away from where the customer lives, portable storage companies don’t appear in the location-based analyses that traditional feasibility studies use.
Other alternatives are multiplying fast. Trailer-based rentals allow customers to order a small, towable unit by app and pay by the day, week, or month. “Storage condominiums” give high-income buyers permanent storage space for boats, cars, or collectibles – essentially personal garages that compete directly with high-end self-storage. Even big-box chains such as Home Depot and Menards now lease contractor bays, siphoning off one of the storage industry’s most reliable customer segments.
Each of these options chips away at traditional self-storage demand, but in different ways depending on the market. Affluent areas see more storage condos; suburban and rural markets face growing pressure from portable and trailer-based models. Yet none of these competitors are reflected in the population-driven math investors still rely on.
That gap is what concerns Charlie Kao, principal of Twin Oaks Capital, which operates a national self-storage portfolio and provides feasibility consulting. Kao has spent years questioning the industry’s reliance on standard metrics. “We’re seeing many storage products now that compete with self storage,” he says. “We just don’t know how directly they affect demand for the facilities we’re used to analyzing.” His concern isn’t that the industry is failing, but that the traditional yardsticks can no longer measure its true shape.
When Population Numbers Mislead
If alternate storage options are one blind spot, population data is another. Feasibility studies still rely heavily on population counts to estimate demand, assuming a direct relationship between the number of residents and the amount of storage they’ll need. But in many markets, those numbers don’t come close to capturing the true customer base.
Charlie Kao points to the difference between a dense urban neighborhood and a leisure market with thousands of part-time residents. “You might have 2,000 people in one zip code and 2,000 in another,” he says. “But if that second market has six or seven lakes, each with 2,000 people there on weekends or during the summer, your storage demand is a completely different story.”
Tourist destinations, college towns, and vacation-home markets often have large transient populations that never appear in official counts. Seasonal renters, students, and second-home owners all create storage needs that fluctuate throughout the year. A feasibility model that only measures permanent residents misses that entirely.
The result is a widening gap between what the data shows and what operators actually experience on the ground. Markets that look overbuilt on paper can stay healthy year-round, while those that seem balanced may face slower lease-up or higher vacancy once the local demand has been fully absorbed.
That’s why Kao and other analysts are urging investors to look beyond the headline numbers. “Where we’re finding opportunity,” he says, “is in the data that doesn’t immediately translate to ‘this is a winner.’ You have to dig deeper.”
The Smart Money
For investors paying attention, the takeaway isn’t to abandon self-storage but to question the data that once made the sector look effortless. The old shortcuts – population ratios, standardized feasibility templates, and generic absorption models – no longer tell the whole story. These tools assume demand will follow predictable lease-up patterns, even when new storage formats are changing how quickly space fills.
Larger operators and institutional buyers have already started adjusting their approach. They’re supplementing demographic data with insights into lifestyle patterns, income tiers, and alternative storage activity. They’re testing their financial projections against different competitive scenarios, asking how portable storage, contractor bays, or storage condominiums might affect lease-up rates or renewal cycles.
This shift reflects a broader professionalization of the industry. Most self-storage facilities today are owned by sophisticated entrepreneurs and REITs, according to Danny TK LAST NAME, a Massachusetts-based broker who has completed more than $160 million in self-storage transactions. “They have software that tells them when to raise prices and when to lower them. It’s not a mom-and-pop business anymore,” he says.
That sophistication extends to acquisition strategy. Businesses like Merit Capital, which now controls hundreds of facilities nationwide, are building deeper underwriting models and developing local intelligence that goes far beyond population density. For smaller investors using off-the-shelf feasibility tools, that creates a growing competitive gap. The difference isn’t just about technology or scale: it’s about curiosity. The most successful investors are the ones asking the questions the software doesn’t know to ask.
The Market Signal
The consequences of those outdated metrics are beginning to show up in pricing. Investors are starting to question the assumptions that once made self-storage look foolproof, and the market is responding. Cap rates – the ratio between a property’s income and its value – have begun to rise after years of steady compression. That shift suggests buyers now expect higher returns to offset the uncertainty created by changing demand patterns and flawed feasibility models.
Charlie Kao has seen the shift firsthand. One of his facilities recently drew an offer below what similar properties were commanding just a few years ago, a sign that buyers are growing more cautious and discounting future income more heavily. It suggests the market is beginning to reprice as investors question the assumptions that once made self-storage deals seem straightforward.
That caution hasn’t yet translated into distress, but it may only be a matter of time. Much of the existing debt was locked in when interest rates were low, insulating many owners from short-term pressure. But Kao expects more movement ahead as loans begin to mature. “The debt that people locked in three to five years ago hasn’t come due yet,” he notes. “I think that could happen in the next year or two.”
For investors, that repricing isn’t necessarily bad news, but it’s a signal. As capital costs rise and underwriting becomes more disciplined, the gap between well-researched projects and formula-driven ones is likely to widen. The next phase of opportunity may belong to those who understand not just where demand exists, but how it’s changing.
A Smarter Yardstick
For decades, self-storage investing was guided by easy math and steady results. But as competition broadens and consumer behavior evolves, those familiar formulas are no longer enough. The investors who succeed in the next cycle won’t be the ones who memorize the ratios: they’ll be the ones who understand the context behind them.
Charlie Kao’s message isn’t pessimism; it’s realism. The sector still offers opportunity, but it now rewards those willing to question the data everyone else takes for granted. In a market once driven by averages, the edge now belongs to those who look closer.
