Is Self-Storage in a Recession? What 63-Facility Operator Nick Huber Reveals About the Current Market
The self-storage industry—once hailed as the golden child of commercial real estate—is facing its most challenging period in decades. Interest rates have nearly doubled, oversupply is rampant, and for the first time in history, major REITs are reporting declining net operating income for six consecutive quarters.
If you’re invested in self-storage or considering entering the market, this isn’t the fairy tale success story you might expect. This is the unvarnished truth from Nick Huber, founder of Bolt Storage, who operates 63 self-storage facilities across the United States.
Featured Answer: The Current State of Self-Storage
The self-storage market is experiencing a recession-like downturn driven by three critical factors: interest rates doubling from 4% to 7.5%, massive oversupply from development booms (especially in the South), and declining move-in demand for three consecutive years. However, operators with strong fundamentals, efficient leasing operations, and the financial stamina to weather the storm are strategically positioning themselves for the inevitable market correction.
Understanding the Self-Storage Market Shift: From Boom to Bust
The transformation of the self-storage landscape has been swift and unforgiving. Just three years ago, investors could find stabilized facilities trading at 8% cap rates with 4% interest rates—a recipe for exceptional cash flow and rapid portfolio growth.
“2021, interest rates were 4% on commercial loans and you could find eight cap storage facilities that were 99% occupancy that hadn’t raised their rent in five years,” Huber explains. The opportunity was clear, and capital flooded into the sector.
But the perfect storm arrived. Interest rates climbed to 7.5% for commercial loans outside of multifamily. Simultaneously, developers went on a building spree, particularly in high-growth southern markets. The result? A supply-demand imbalance that’s crushing returns across the industry.
For the first time ever, all major self-storage REITs—Public Storage, Extra Space, and CubeSmart—reported declining NOI for six straight quarters. This isn’t just a blip; it’s a fundamental market reset.
Why the South Got Hammered: The Development Oversupply Crisis
While conventional wisdom suggests investing in high-growth southern markets, the self-storage sector tells a different story. The ease of development in states with favorable zoning and lower construction costs created a development feeding frenzy.
“All the money flew to the South. Everybody was after yield. Developers went nuts in the South, even in small towns,” Huber notes. He cites specific examples: Pensacola, Florida; Milledgeville, Georgia; and countless other markets saw massive new supply hit simultaneously.
The impact has been devastating for existing operators. Huber’s own portfolio includes a $1.5 million facility in Pensacola where Public Storage built a 50,000-square-foot climate-controlled building directly across the street, offering 10×10 units for just $19 per month.
The Unexpected Winner: Northeast Markets
Counterintuitively, Huber’s best-performing properties are in the Northeast—including declining population centers like Elmira, Corning, and Horseheads, New York. While 99% of investors avoid these markets due to negative net migration, the barriers to new development create a protective moat.
“Our best performing deals are in areas where development’s hard,” Huber explains. Property taxes, entitlement challenges, and construction costs in the Northeast make speculative development financially prohibitive, protecting existing operators from the oversupply plaguing sunbelt markets.
The Leasing Revolution: How to Compete in a Saturated Market
When demand softens and supply explodes, leasing efficiency becomes the difference between survival and failure. Bolt Storage has implemented several cutting-edge strategies that operators should consider:
The South African Sales Advantage
After testing various offshore teams, Bolt Storage discovered that South African sales representatives dramatically outperform other options. Their conversion rates jumped from 30% to 42% simply by switching from Philippine-based reps to South African teams.
“It’s just so much more approachable accent for US consumers,” Huber notes. The company now runs a fully remote sales operation with tight talk tracks, active call monitoring, and continuous training.
Performance-Based Compensation That Drives Results
Every sales representative operates on a variable compensation structure. Representatives earn $2 per rental (jumping to $4 after 30 rentals in a month) and $10 for every Google review that mentions their name—$20 if the review includes a photo.
This incentive structure generated 110 five-star Google reviews in a single month. Since Google reviews directly impact local search rankings and consumer trust, this strategy delivers compounding returns over time.
Digital Marketing Infrastructure
Bolt Storage employs a full-time digital marketer and web developer (both based in South Africa and Egypt for cost efficiency). Their tech stack includes:
- Aggressive Google Ads campaigns tracking conversions and website behavior
- Meta retargeting to recapture interested prospects
- Five-minute response times for website visitors
- Comprehensive SEO strategy focused on local dominance
“We track website visitors. We retarget them across our sales outreach campaigns within five minutes of when they leave our site,” Huber explains. This level of responsiveness is critical when competing against larger operators with established brand recognition.
The Cold, Hard Truth: Current Acquisition Environment
Huber hasn’t closed a significant acquisition in two years—and that’s intentional. The math simply doesn’t work in today’s environment for most deals.
Properties that were once 99% occupied now hit the market at 60-75% occupancy with declining year-over-year revenue. Sellers still remember 2021 pricing, creating a massive bid-ask spread. Meanwhile, buyers face 7.5% debt costs, making it nearly impossible to generate meaningful cash-on-cash returns.
What’s Actually Penciling Today
The single deal Bolt Storage closed recently—a Kokomo, Indiana property requiring over $3 million in equity—only worked because of specific local market conditions and relationship-driven pricing. Even their existing portfolio tells a sobering story: “Half of them are below projections. Luckily, all but one of our properties are actually sending cash to our investors, but not at the level we’d hoped.”
This brutal honesty separates successful operators from those heading toward trouble. Bolt Storage successfully refinanced their entire floating-rate debt portfolio without requiring additional capital from investors—an achievement many operators cannot claim.
Development vs. Acquisition: Lessons from the Trenches
Huber’s first deal was a ground-up development in upstate New York: 39,000 rentable square feet with an additional 12,000 square feet across the street, totaling $2.9 million in project costs. That single deal—now worth $8-10 million—generated enough equity to fund Bolt Storage’s acquisition spree.
“One deal can change your life and that one deal changed my whole life,” Huber reflects. However, he’s quick to add that he wishes he’d started with acquisitions instead.
The Development Reality Check
Managing entitlements, serving as your own project manager, and then leasing units while construction debt ticks up creates immense stress. After their successful first development, Bolt Storage attempted additional ground-up projects but faced zoning rejections that delayed their growth by two years.
“I wish I would have done that [acquisitions] from the beginning because we would have grown much, much faster,” Huber admits. For most operators, acquiring stabilized or value-add properties provides a clearer path to building a portfolio than development.
Surviving the Storage Recession: Strategic Positioning for Recovery
The operators who survive the next 2-3 years will find themselves in an enviable position. Acquisition opportunities will emerge as over-leveraged owners face refinancing deadlines they can’t meet. Competition will thin as part-time operators exit the business.
“If you can ride out this storm, if you can find a way to make money and find a way to stay in the game for the next three to five years, there’s going to be a lot less people competing with you,” Huber emphasizes.
The Sit-On-Your-Hands Strategy
Real estate veterans understand that sometimes the best action is inaction. “There’s many, many times in the real estate business where you have to sit on your hands for years,” Huber quotes from a mentor. “Rule number one is never do bad deals and find a way to have enough money to where you don’t have to do deals to pay your bills.”
For Bolt Storage, this means focusing on operational excellence across their existing 63 properties while building relationships with potential sellers. Their cold-calling team of South African representatives makes 400 combined calls daily—not to close deals today, but to be top-of-mind when motivated sellers emerge.
The AI and Technology Integration
Bolt Storage leverages artificial intelligence for quality control across their operation. Using Zapier integrations with Gmail, the team receives instant alerts on negative client sentiment across all properties and communication channels.
Tools like Fathom (AI meeting assistant) and API connections help streamline operations and identify issues before they escalate. However, Huber maintains a bearish long-term view on AI due to energy consumption concerns and potential infrastructure limitations.
Expanding Beyond Storage: The Industrial Real Estate Opportunity
While Bolt Storage remains laser-focused on self-storage, they’ve opportunistically acquired two industrial buildings in Athens, Georgia—one single-tenant and one multi-tenant property with 2,000-square-foot average bay sizes.
The key difference? “You really have to understand that local market,” Huber explains. Unlike self-storage, where you can reasonably underwrite a deal anywhere in the country with basic data, industrial real estate requires deep local expertise in tenant demand, building specifications (ceiling height, loading docks, parking), and market dynamics.
For operators considering asset class diversification, Huber’s advice is clear: stick to markets you know intimately. The scalability challenges of industrial real estate make it a poor fit for most self-storage operators looking to deploy capital nationally.
Raising Capital in Uncertain Times: The Honest Approach
Most syndicators lead capital raising presentations with overwhelming positivity—projected returns, market opportunity, their track record of success. Huber takes the opposite approach.
“I sat down with a lot of investors in 2022, 2023 and said, hey, look, this is a good deal. I like this deal. I’m going to put some of my own capital into this deal, but you got to understand that there’s some things out of our control.”
He explicitly addresses the three major risk factors:
- Interest rate movements beyond anyone’s control
- Development competition in the local market
- Storage demand fluctuations driven by housing market activity
By acknowledging that a five-year hold could easily become a ten-year hold if market conditions don’t improve, Huber sets realistic expectations. “If it sounds too good to be true, it likely is,” he reminds potential investors.
This approach filters out investors who aren’t truly prepared for commercial real estate’s cyclical nature while building deep trust with those who do commit capital.
The One Skill That Matters Most: Sales
When asked what advice he’d give his younger self, Huber’s answer was immediate: “Life is sales.”
This applies far beyond traditional sales scenarios. Convincing a property owner to sell to you instead of listing with a broker is sales. Attracting talent to work for an unproven startup is sales. Raising investor capital is sales. Negotiating with vendors is sales.
“You have to get people to trust you from all angles,” Huber explains. “People won’t sell to you unless they trust you. Vendors won’t do business with you unless they trust you. People won’t come to work for you because you’re not reputable.”
For operators struggling to gain traction, investing in sales skills—communication, relationship building, trust development—will provide returns across every aspect of your business.
What This Means for Self-Storage Investors Today
The self-storage market is experiencing a painful but necessary correction. The question isn’t whether you should avoid the asset class entirely, but rather how to position yourself strategically for what comes next.
For active operators: Focus intensely on operational excellence. Implement aggressive leasing strategies, leverage technology for efficiency, and optimize every aspect of your business. The operators with the tightest operations will weather this storm and thrive when the market rebounds.
For new investors: Exercise patience. Building relationships with potential sellers, studying markets, and preparing your capital and team for deployment will serve you better than forcing a deal in today’s environment. The motivated sellers will emerge—just not yet.
For existing investors: Communicate proactively with your operators. Ask hard questions about occupancy trends, same-store revenue growth, and refinancing plans. The operators willing to share bad news along with good news are the ones you want managing your capital.
The self-storage recession is real, but it’s also temporary. Markets overcorrect, then stabilize. The operators and investors who maintain discipline, build operational excellence, and preserve capital through this downturn will find themselves with extraordinary opportunities when the cycle turns.
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