When three of the most seasoned minds in self storage sit down together — collectively representing over 4,000 properties and $25 billion in transaction volume — what they say matters. At the latest Argus Self Storage Advisors investment webinar, panelists Paul Spital (Senior VP of Acquisitions, Public Storage), Liz Schlesinger (Founder & CEO, Merit Hill Capital), and James Dennison (Partner & Head of Acquisitions, Baranoff Holdings) shared candid views on where the market stands, where the opportunities are, and what's keeping investors up at night.

Here are the most important takeaways.

Are We Past the Bottom? Cautious Optimism — But No Straight Shot Up

The panel agreed: the last three years have been among the most difficult the industry has seen. Persistent supply pressure, weak new-customer demand, and a flat economic environment have created a prolonged slog that even veteran investors found surprising in its duration.

“It’s been pretty shocking how long this sluggish demand has been in place alongside really, really aggressive amounts of supply,” said Liz Schlesinger, who has invested in the space since 2006. “Rentals were positive in April and May for our portfolio. Vacates have continued to decline. I’m cautiously optimistic — but it’s not going to be a straight shot up.”

Paul Spital pointed to a geographic split: coastal and Midwest markets are showing signs of inflection on both achieved and scheduled rates, while Sun Belt markets like Atlanta, parts of Florida, and the West Coast of Florida remain stubbornly weak. “New customer demand is weak,” he said, “and it really comes down to that absorption of new supply continuing to happen.”

James Dennison echoed the sentiment, noting that street rates in his portfolio just barely edged above year-over-year levels from May 2025 — encouraging, but not a breakout. The consensus: we’ve likely hit the floor, but the climb back will be slow.

Where the Opportunities Are Today

Despite the challenging environment, active buyers are finding deals — they’re just working harder to uncover them.

Off-market transactions are where a disproportionate share of value is hiding. Public Storage has committed approximately $500 million in acquisitions year-to-date, with roughly 65% of those deals sourced off-market. “Dislocation in the marketplace is creating opportunity,” Spital noted, “but it may not be opportunity that wants to present itself in a full marketing process.”

Lease-up and C of O deals are growing in availability as developers who built in 2021–2024 struggle to hit their revenue targets. Both Schlesinger and Dennison see selective opportunities here, but with important caveats: many broken developments are broken for a reason, often built into oversupplied markets with no visible catalyst for recovery.

Third-party managed assets — particularly those managed by CubeSmart and Extra Space — offer a less obvious opportunity that Merit Hill has been mining. “They’re incredible managers,” Schlesinger said, “but if they haven’t been in place long, or if development came online during their tenure, they haven’t been able to work their magic. We’re willing to dig into those types of sites that a lot of people have overlooked.”

Below-replacement-cost acquisitions remain the clearest source of discipline-driven value. Baranoff’s in-house development team regularly confirms that current acquisition prices are well below what it would cost to replicate the same assets — a crucial underwriting sanity check that many buyers are skipping.

Back to Basics: Replacement Cost as the New (Old) North Star

One of the webinar’s clearest themes was a return to fundamental underwriting discipline — specifically, replacement cost as a floor for evaluating basis.

“We’re underwriting rates at the lowest they’ve been in 10 years,” Spital said of Public Storage’s approach. “Our weighted price per square foot is right around $145 a foot. If I were to go replicate that portfolio today — either through acquisition or development — I’d be well above that.”

This discipline was common pre-2015 but got crowded out during the low-rate era, when cheap debt made cap rate arbitrage the dominant lens. That era is over. Today’s environment demands investors ask: what would it cost to build this, and am I buying meaningfully below that?

AI: Already Changing the Business — But Human Judgment Still Wins

All three panelists are actively deploying AI across their platforms, though in distinct ways reflecting their different business models.

Public Storage is the most advanced, having announced a partnership with Welltower to layer decades of operational data onto predictive models. The company has moved 80–90% of all customer transactions to digital channels, driven payroll to the lowest level among REITs, and uses AI for in-house security monitoring — contributing to the lowest break-in rates in years.

Baranoff Holdings is using AI to handle first-pass analyst tasks on acquisitions and to mine a decade’s worth of portfolio data for sharper investment decisions. James Dennison sees it as an equalizer: “It presents us as a smaller group an opportunity to close the gap a little bit. These additional tools are hopefully leveling the playing field.”

Merit Hill Capital views AI primarily as an intelligence amplifier for its asset management team — red-flag and green-light reporting, automated portfolio monitoring, and AI-assisted identification of mispriced units. But Schlesinger offered the most thoughtful caution: “There’s a healthy sense that you don’t want to convince yourself through technology that something really works that may not.”

The panel unanimously agreed: site visits remain irreplaceable. Google Maps is not a substitute. Real estate is still real estate, and the best investors in the room personally visit dozens of properties every year.

What’s Keeping Valuations Elevated?

Despite weak fundamentals, pricing on quality stabilized assets remains aggressive. The answers are structural: capital formerly in office is searching for a new home, endowment funds now carry mandatory self storage allocations, and COVID spotlighted the sector’s resilience. The result is a deep, competitive buyer pool that keeps compressing yields on core deals.

The other driver is the institutional premium. Private operators running sub-optimal payroll structures represent a clear upside case for institutional buyers who can bring technology, scale, and management efficiency to bear. For investors who can’t justify those prices — and all three panelists described deals where they’ve walked away — the lesson is discipline.

The Management Debate: Remote, Hub-and-Spoke, or On-Site?

Dennison sees pure remote as viable mainly in rural markets but challenging in the dense urban environments Baranoff operates in. Hub-and-spoke, where adjacent stores share staff resources, is more workable.

Public Storage has effectively moved beyond both labels. Using AI-driven demand signals, the company deploys manager hours precisely when customers need them — reducing typical full-time equivalents at a property from 1.5 to as low as 0.5, while maintaining service quality.

Schlesinger offered the most human-centered perspective, drawing on a personal experience: when she lost everything in a fire the year she founded Merit Hill, she became a storage customer for the first time. “When you lose everything and have a 6, 4, and 2-year-old, interacting with a robot was not interesting for me. Customers are often not storing in happy circumstances. Human interaction matters.”

Development: Still the Industry’s Achilles Heel

Perhaps no topic generated more frustration among the panelists than supply — specifically, the continued pace of new development in markets that by all rational measures cannot absorb it.

Baranoff’s portfolio: roughly 20% of its 100 assets are seeing something actively under construction nearby. Public Storage’s development pipeline has dropped from $600 million to $400 million — a meaningful decline — but the cumulative effect of years of overbuilding means existing stock is still being absorbed.

“It is really concerning that in this market, they’re still developing,” Schlesinger said. “Some markets may never recover. Atlanta hasn’t been good since 2008.” The key risk factor: population growth is the only true demand driver for self storage — and with birth rates and immigration both at historic lows, new demand isn’t being created.

The Biggest Risk: Supply, with Legislation on the Horizon

When asked point-blank what keeps them up at night, supply was the universal answer. “Once it’s delivered,” Dennison said, “if it’s a bad location tucked back somewhere no one can see, it brings down rates for the whole market — for the life of that property.”

Legislation emerged as a secondary but growing concern. The SSA and its state affiliates are working proactively — alongside REITs and private operators — to push back against restrictive industry-focused regulations, emphasizing price clarity for consumers and self storage’s role as an affordable solution for people facing housing pressure.

Secondary Markets: Where the Spread is Widest in 20 Years

The cap rate spread between major coastal markets and secondary or tertiary markets is currently 200–400 basis points — as wide as it has been in two decades.

Dennison was direct: “We have deals in secondary markets at seven, seven-and-a-half, eight caps. And honestly, I’d take the best store in a secondary market over the seventh or eighth best store in a major metro. It’s still real estate — great real estate in a secondary market beats mediocre real estate anywhere.”

The One-Word Summary

Ben closed the webinar with a simple question: give us one word that describes the self storage industry today.

James Dennison: Recalibrating

Liz Schlesinger: Stagnant

Paul Spital: Transformation

Together, those three words capture the industry’s current tension better than any paragraph could. The fundamentals are flat to weak, the easy money is gone, and yet technology and institutional capital are reshaping the competitive landscape at a pace that would have been unimaginable a decade ago. For investors willing to do the work — underwriting to replacement cost, sourcing off-market, visiting every site, and resisting the temptation to let a model convince you a bad deal is a good one — there are real opportunities in this market.

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