Strategic Evolution in Self-Storage: How One Operator Navigated Market Changes Through Partnership

Written by:

Steve Marcinuk

Date:

16 Jan 2026

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The self-storage industry has changed rapidly in recent years, forcing operators to adjust their strategies in response to rising interest rates, more complex market dynamics, and higher investor expectations. For mid-market companies, the challenge is to find sustainable advantages while managing growth in a sector that demands operational sophistication.

Sergio Altomare’s path from Federal Reserve employee to self-storage entrepreneur shows how a focus on core strengths and the right partnerships can create a scalable, competitive platform. His company, Hearthfire Holdings, recently announced a significant shift: as of February 2025, most of its portfolio will be managed by CubeSmart, a national self-storage brand. This move highlights a broader industry trend toward specialization and the leveraging of external expertise to remain competitive.

From Federal Reserve to Real Estate Investment

Altomare spent 22 years at the Federal Reserve, working in bank supervision and regulation and observing multiple economic cycles. “I got to experience a lot of boom and bust cycles related to the economy and recessions,” he says. This experience gave him insight into how capital flows and monetary policy shape investment opportunities.

He first entered real estate in 2004 with a duplex purchase, but early zoning setbacks dampened his enthusiasm. That changed in 2012 when he met his future wife, Corinne, who was buying a triplex in Philadelphia. Altomare helped manage the property, bringing a systematic approach to operations. “I slowly started to build up the systems, because that’s what I did—identify software, implement the software, find the efficiencies,” he recalls.

This focus on process became the foundation for scaling their investments. Between 2012 and 2016, they grew their portfolio and began working with outside investors. By 2016-2017, both had left the Federal Reserve to pursue real estate full-time.

Strategic Pivot to Self-Storage

The decision to move from multifamily to self-storage was driven by their assessment of market trends and growth potential. “We didn’t feel like the upward trajectory of multifamily was going to offer a greater chance, so we pivoted to self-storage,” Altomare explains.

The timing proved advantageous. Self-storage demand surged during the pandemic, but Altomare notes that growth has since returned to more typical levels. “The post-COVID boom, where self-storage exploded in growth, has normalized a bit.”

CubeSmart Partnership: A Shift in Strategy

In February 2025, Hearthfire will transition management of most properties to CubeSmart, reflecting a strategic shift in its business model. The company had evolved through several management phases: self-managing its first facility, expanding regionally with in-house staff, moving to third-party management, and now partnering with a national brand.

“We just didn’t feel like we could compete with the CubeSmarts and Extra Space of the world, and it really made sense to leverage their brand power,” Altomare says. CubeSmart’s willingness to take on the entire portfolio, combined with proximity—their headquarters are ten minutes apart—made them the right partner.

This partnership allows Hearthfire to focus on development, acquisitions, and other core strengths, while CubeSmart handles day-to-day institutional operations. “It’s really about understanding the core competencies and where you have an edge and leverage,” Altomare says.

Competing in a Fragmented Market

While the self-storage sector has become more sophisticated, it remains fragmented. National REITs manage or own about 40% of the market, leaving more than half available to independent and mid-market operators. “The self-storage space is very competitive now and has gotten a lot more sophisticated. The opportunity, though, is that it’s still very fragmented,” Altomare says.

Hearthfire has capitalized on this by focusing on development, completing seven new or expanded properties in the past ten months. “We’ve got a scalable development platform, and we’re looking to expand and continue to take advantage of that, because we are very good at it,” he says.

Their development activities extend beyond traditional self-storage to include flex space, industrial outdoor storage, and related sectors, leveraging existing expertise and relationships.

Underwriting in Today’s Market

Current market realities have forced changes in how Hearthfire underwrites deals. “Everything from construction costs has gone up, and municipalities have created higher barriers and restrictions,” Altomare notes.

The company has adopted more conservative assumptions, lowering stabilized occupancy projections from 92% to 90% and reducing expected rate growth. “Historically, you can get 4% to 5% on a stabilized asset; we’re more conservative from that perspective,” he says.

Major REITs have also shifted revenue management strategies, prioritizing occupancy over rates. This means new tenants often move in at lower prices, requiring more extended ramp-up periods to reach target performance.

Institutional Capital: Focus on Fundamentals

When working with institutional investors, Altomare emphasizes the importance of strong market fundamentals and data-driven deal sourcing. “It’s really about having a programmatic way of identifying where those investment opportunities are,” he says.

He advises institutions to focus on demographic trends, supply-demand balance, and local rate positioning. “Is the strength of the population there, and is the self-storage supply materially lower than the competing markets? And then where are the rates?”

Deploying large amounts of capital in self-storage can be challenging because the average development costs $10 to $15 million, requiring steady deal flow and robust origination capabilities.

Market Outlook and Risk

Altomare believes the commercial real estate downturn of the past two years is easing, with new opportunities emerging. “We believe the worst is behind us. Commercial real estate has been in a recessionary environment now for a couple of years, and we are in the early stages of what could be a new level of growth.”

However, he is cautious about oversupply in specific markets. “There are plenty of markets that are overdeveloped. There’s a lot of supply that has to be absorbed,” he says, noting that many projects coming online now were launched under different conditions two years ago.

For 2026, Hearthfire’s acquisition strategy targets markets that are truly undersupplied and have limited new development in the pipeline, recognizing that multiple new facilities can slow lease-up and extend stabilization periods.

Leveraging Technology and Data

A key part of Hearthfire’s edge is its use of technology and data analytics for deal sourcing and market selection. “We’re a technology-centric and data-centric firm,” Altomare says. “One of the areas that we are heavily focused on is really diving into different levels and different layers of data, not just to be able to tell you what markets and what factors we’re looking for, but how do we uncover those opportunities at scale.”

This systematic, data-driven approach is central to their ability to find and execute on investment opportunities in a crowded market.

Looking Ahead: Focus and Partnerships

Hearthfire’s growth strategy is built on strategic partnerships, development expertise, and data-driven origination. By outsourcing property management to CubeSmart while focusing on development and acquisitions, the company positions itself to compete with much larger operators.

“We like to think of our platform as being an extension of your own,” Altomare says to potential partners. “If you’ve identified a self-storage site or piece of land, and that’s the extent of what you’re able to contribute, that’s fine. We can take it the rest of the way and make you a partner.”

This model reflects a broader industry move toward specialization and collaboration, with companies focusing on what they do best and partnering to deliver complete solutions. Hearthfire’s evolution demonstrates that adaptability, targeted partnerships, and a commitment to technology can provide sustainable advantages in a market that is both increasingly competitive and full of opportunity.