Self Storage Development Gains Momentum as Tax Incentives Drive Investment Activity

Written by:

Steve Marcinuk

Date:

16 Jul 2025

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The self storage sector is experiencing renewed momentum as developers and investors capitalize on favorable tax policies and identify opportunities in previously challenging markets. With bonus depreciation returning to 100% and strategic tax abatement programs creating new development pathways, industry professionals are positioning for increased activity through the remainder of 2025.

Hans Hardisty, Founder and Managing Partner of National Storage Partners, brings a unique perspective to the current market dynamics. His involvement in self storage spans four decades, beginning when his family opened their first facility 42 years ago and grew it into a 15-property portfolio before recently exiting. This generational experience, combined with his team’s billion dollars in transaction volume over the past decade, provides insight into both historical patterns and emerging opportunities.

“Self storage in general is a relatively recession-resistant asset class, and we’ve had a pretty soft economy since interest rates went up,” Hardisty observes. “However, self storage still has a lot of focus on it. There’s people out there with funds, and if you saw the news recently, the tax benefits like bonus depreciation going to 100% that just got passed is going to be a big factor for those looking to pick up existing assets.”

Development Focus Drives Market Activity

Unlike many brokerages that focus primarily on stabilized assets, National Storage Partners has developed a specialty in development deals, which Hardisty notes requires deeper market knowledge and longer transaction timelines. “Not all brokers really know how to truly underwrite a property. It’s more complicated and a much longer timeline to get a deal closed than putting a cap rate on a stabilized asset,” he explains.

This development focus has led the firm to concentrate on markets where they can add significant value, particularly in the Northeast and Florida. Recent activity includes institutional-sized deals featuring mixed climate-controlled and non-climate inventory in strong demographic markets. The firm maintains close relationships with developers and construction teams while carefully monitoring insurance costs, especially in Florida.

Chicago Emerges as Unexpected Opportunity

One surprising development has been increased activity in the Chicago market, traditionally viewed as challenging due to Cook County’s tax environment. However, Hardisty notes that developers and acquisition groups have identified strategies to make deals work, particularly through tax abatement programs.

“Cook County has had a reputation of pretty difficult taxes, but some of the developers and acquisitions groups have figured out how to make that work,” he says. “With less competition, that’s becoming a more active playing field, especially with what I believe is a Class 6a or 6b tax abatement program that’s very beneficial to development groups.”

This shift has attracted New York-based investors looking to expand their footprints, with several deals currently under contract in the Greater Chicago area. The reduced competition compared to traditional East Coast markets has created opportunities for developers willing to navigate the regulatory environment.

Market Fundamentals Drive Site Selection

Despite varying regional dynamics, Hardisty emphasizes that successful development still depends on fundamental market characteristics. “We want to look for strong enough rents, high enough population density, and hopefully low square footage per capita,” he explains.

These criteria have guided National Storage Partners’ geographic expansion, with active deals spanning from Greater Boston through Metro New York, Philadelphia, Atlanta, and Florida. The firm has strategically placed advisors in major metropolitan markets, each bringing deep local market knowledge and established relationships.

The team’s approach differs from traditional brokerage models. “We pride ourselves on not being dial-for-dollars brokers, but our reputation brings us deals,” Hardisty notes. “We really look for getting references from other industry professionals and groups that know our reputation is top-notch.”

Looking Forward

The outlook for the remainder of 2025 appears increasingly positive, driven by both policy changes and market fundamentals. The restoration of 100% bonus depreciation provides immediate tax benefits for asset acquisitions, while development activity continues in markets with strong demographic support.

Hardisty anticipates increased transaction volume as the year progresses: “I think we’ll see more activity the second half of 2025 and into next year.” This optimism is supported by continued investor interest and the availability of capital for quality opportunities.

The self storage sector’s resilience during economic uncertainty continues to attract institutional and private investors seeking stable, recession-resistant assets. As development costs stabilize and regulatory environments become more predictable, the combination of favorable tax treatment and strong market fundamentals suggests continued growth in both development and acquisition activity.

For developers and investors, the current environment presents opportunities to capitalize on reduced competition in certain markets while benefiting from supportive tax policies. Success will likely depend on thorough market analysis, strong local relationships, and the ability to navigate increasingly complex regulatory and insurance environments, particularly in high-growth markets like Florida.

The self storage industry’s maturation has created opportunities for specialized firms like National Storage Partners to differentiate through expertise in complex transactions, while the sector’s fundamental appeal as a recession-resistant asset class continues to drive investor interest across diverse market conditions.