On Wilshire Boulevard in Los Angeles, the iconic SAG-AFTRA building hosts an unlikely tenant in its windowless core. Although traditional office suites line the perimeter, the deep interior, which the owner previously struggled to lease, was recently carved into self-storage.
“The owner said, ‘I have this huge floor plate, and I can’t find an office tenant who wants all the deep, dark space in the middle,’” says Katharine Lau, cofounder and chief executive officer of Stuf Storage, which partnered with the landlord to run the storage space.
Lau’s company, launched in 2020, forms revenue-sharing agreements with landlords such as Vornado, Hines, and Jamestown to monetize what Lau calls the “weird, funky spaces” in office and multifamily buildings that aren’t being used.
For self-storage, Lau says, “You don’t need windows. You don’t necessarily need foot traffic. So, [owners] go from having no tenant, no rent, to now making something off of every square foot of space.”
The startup’s growth in dense U.S. cities—including New York; Boston; Washington D.C.; and San Francisco—underscores the demand for self-storage close to urban customers, rather than just large, single-purpose facilities at the edge of town.
“In cities where apartment living is the norm, [self-storage] plays a quiet but important role,” says Ryan Lovett, CEO and founder of LOVETT, a development, planning, and design consultancy. “It gives people flexibility. It lets households stay put longer, grow in place, change jobs, have kids, run side businesses, or downsize without leaving the neighborhood for the suburbs.”
Investors have dramatically increased their allocation to self-storage over the last several years. A rush into the asset class occurred from 2020 to 2022, when transaction volume hit $50 billion, far exceeding the $35 billion spent during the entire seven‑year period from 2013 to 2020, according to Cushman & Wakefield. Transaction volumes are now normalized but remain well above their pre‑pandemic baseline.
The growth of the sector comes with civic tradeoffs. As housing affordability worsens, increasingly more cities are restricting self-storage projects to preserve land for housing or commercial uses that bring in high numbers of jobs. That partly explains why a growing share of new urban self‑storage comes from adaptive reuse rather than from ground‑up development.
Stuf’s tech-enabled model takes things one step further by tucking storage into such hard-to-lease spaces as building basements, garages, mechanical floors, and back-of-house areas. Internet of things (IoT) devices help customers use Stuf’s facilities without the need for staff on site.
“It’s like the ultra-, ultra-mixed-use project,” where every square foot is used, Lau says.
Structural shifts drive demand
Once viewed solely as a safe investment, self-storage has been having a moment. It proved to be the best-performing sector in the NCREIF Property Index from 2005 to 2022, with returns since 2010 nearly double that of the overall index.
Institutional investors have taken a much larger role. As of October 2024, the four public self‑storage REITs owned about 30 percent of all U.S. self‑storage inventory, up from 17 percent in 2000, according to CBRE.
Institutional capital is now treating the sector “as a diversification that behaves differently from traditional real estate,” says Adam Siegel, vice president of product growth at the commercial real estate marketplace Crexi.
That difference is largely “driven by fundamental ways American life has changed,” Siegel says.
One driver: A “frozen” housing market in which high interest rates have prevented many homeowners from moving, Siegel says. “In the meantime, life keeps happening—marriages, divorces, aging parents, career changes,” he says. “Storage becomes the pressure valve for life events that used to trigger home purchases.”
Generational patterns also make a strong case for the sector’s future growth. Millennial use surged 22 percent over just two years, from 2023 to 2025, according to a recent study by the Self Storage Association.
Unlike previous generations, many younger adults are delaying homeownership—mostly because they can’t afford it. “This creates a massive cohort storing belongings in limbo, waiting for the financial stability their parents reached a decade earlier in life,” Siegel says.
To stay in expensive urban neighborhoods, Millennials and Gen Z are trading square footage for location—swapping a two-bedroom unit for a one-bedroom, says Drew Dolan, principal and fund manager at DXD Capital, a private equity firm focused exclusively on self-storage investments across the United States.
“When you start talking to the younger generations, [you see that] storage is more like an extension of their home,” Dolan says. “It serves as that garage they can’t afford.”
Small businesses, solopreneurs, and freelancers are also driving self-storage use. Business use now accounts for roughly 30 percent of demand, according to Dolan.
It’s hard for budding entrepreneurs to justify the high rents and long lease commitments that come with conventional warehouse or storefront space. As an alternative, many turn to self-storage for inventory, last-mile logistics, returns, and flexible staging.
“Self-storage has quietly become infrastructure for the gig economy, [providing] flexibility that traditional commercial real estate can’t match,” Siegel says.
“It’s not glamorous, but it’s powering a lot of entrepreneurial activity.”
Opportunity costs of self-storage
Although demand for self-storage is high, that doesn’t necessarily make it the highest and best use of urban land.
“While self-storage is incredibly profitable for owners—40 to 60 percent margins—it is terrible urbanism,” Siegel says. “From a city perspective, self-storage is essentially dead space. No third places, no vibrancy, no community benefit.”
Siegel and other critics point to the inward-facing nature of the sector. Self-storage generates minimal property tax in comparison to residential or mixed uses. The traffic and loading impacts can be more akin to light industrial logistics than to retail—and self-storage doesn’t promote the dwell time that would support neighboring businesses. It’s often windowless and unengaging, thus contributing to a “dead” pedestrian experience. It creates few jobs.
Siegel says that a self-storage development with more than a thousand units often employs only “a handful of people.”
“Compare that to what residential or retail would deliver on the same site,” he says.
Cities restrict self-storage
Arguments over the opportunity costs of urban self-storage are in sharper focus as cities across the U.S. face deepening housing affordability crises.
“In land-constrained markets, every parcel that becomes storage is a lost opportunity for housing or economic activity that actually builds neighborhoods,” Siegel says. Cities are increasingly responding to the perceived tradeoffs between self-storage and housing by treating “self-storage like an industrial use to be contained, not a neutral commercial activity,” he says. Common policy moves include reclassifying self‑storage so it is no longer a by‑right commercial use.
In May 2025, Chicago’s City Council adopted an ordinance that bans self-storage in most business, commercial, and downtown zoning districts. New York City adopted a zoning amendment that, in most cases, freezes new self‑storage development in Industrial Business Zones, unless developers obtain a special permit. Denver adopted zoning code changes that prohibit new self‑storage facilities within a quarter mile of a light rail station. Providence, Rhode Island, banned new self-storage developments altogether.
Other cities require that self-storage developments include mixed-use elements. In 2015, Charlotte adopted a zoning text amendment allowing self‑storage in certain mixed‑use areas only if half of the ground floor goes to office, restaurant, or retail uses. Portland requires similarly active ground-floor uses along key corridors and near streetcar lines.
Lovett questions the wisdom of cities mandating that self-storage facilities include retail, as it doesn’t inherently change storage tenants’ behavior. They tend to load in and get out, without dwelling at surrounding businesses.
“Forcing storage to behave like retail usually backfires,” he says. “Adding shops at the base or demanding active ground floors introduces risk without changing what happens above. In many urban neighborhoods, that retail doesn’t pencil, turns over quickly, or sits dark. It complicates financing and operations, and often [it] produces worse outcomes than doing nothing at all.”
Design integration
Even as more cities push self‑storage out of prime locations or tie it to mixed-use requirements, some developers are trying to make the buildings themselves easier neighbors. Rather than building windowless fortresses, they are adopting subtler façades and more flexible layouts to reduce friction with surrounding streets and uses.
Many of DXD’s facilities in urban or close-in locations are designed to blend in, Dolan says. They have windows, purely for aesthetic purposes. A recent 750-unit development in Bristol, Rhode Island, is “surrounded by neighbors on three sides, and they just did not want it to look like a self-storage facility,” he says. Instead, DXR designed the facility to look like “individual townhomes.”
Many of DXR’s investment properties are built to allow customers to park and exit their units from an interior courtyard. This layout eliminates the rows of exterior doors and loading docks, which can disrupt a neighborhood’s flow and aesthetics.
“It does not necessarily have to look like what we think traditional storage is,” Dolan says.
An argument for invisibility
Lovett argues that, in cities, the best self-storage is almost invisible. Cities should shift, he says, from a “make storage behave like retail” approach to one where storage is faster, quieter, and easier to approve in exchange for staying out of the way.”
“That is a [tradeoff] the business model can absorb,” Lovett says.
Seen through that lens, self-storage “shouldn’t be a landmark or a lifestyle building” but one treated as what it really is: “an urban utility that supports denser living without demanding attention.”
That mix is also where regulation comes in, Lovett says. For ground-up projects, he described “a baseline of coexistence” for self-storage projects: Limiting long stretches of blank frontage; controlling curb cuts and loading; making entries obvious, well lit, and safe; and letting the rest of the building recede, “rather than announce itself.”
For operators to get on board, their following these guidelines has to buy them something tangible, such as faster approvals, clearer entitlements, fewer design fights, or more flexibility elsewhere in the building, Lovett says. “Invisibility has to be rewarded, not just demanded,” he says. “We don’t need iconic self-storage temples. We need storage that quietly makes urban life easier, stays out of the way, and doesn’t make the street worse in the process.”
Invisibility is exactly what Stuf Storage is going for, Lau says.
“Stuf monetizes underutilized space within existing buildings, which makes our version of self-storage invisible,” she says. “We aim to deliver the benefits of proximity without sacrificing valuable urban land.”
