Why Self Storage Rewards Patient, Data-Driven Developers

Written by:

Steve Marcinuk

Date:

11 May 2026

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The self-storage sector rarely makes headlines the way multifamily or office markets do, but for investors paying close attention, it offers dynamics that reward discipline and long-term thinking. As construction costs stabilize, equity remains cautious, and home sales sit near multi-decade lows, the developers best positioned to benefit are those who started planning years ago and chose their sites carefully.

Drew Dolan, Co-Founder, Principal, and Fund Manager at DXD Capital, has spent a decade building a data-driven approach to self-storage development. His perspective on where the market stands today and where it is heading offers a useful lens for investors considering the asset class.

From Engineering to Development

Dolan’s path into real estate began in construction sales after completing an engineering degree. Working alongside developers, contractors, architects, and bankers, he concluded that developers were having the most fun and making the most money.

What drew him specifically to self-storage was the combination of simplicity and analytical depth. The product itself is largely uniform, a 10-by-10 unit in Nantucket is functionally the same as one in Maui, but the economics of where to build are anything but simple. “That one decision, when you decide where to invest, will make or break your deal,” he notes. That conviction has anchored DXD’s strategy since its founding.

A Market in Transition

The past six to twelve months have brought notable changes to the development landscape. Construction pricing, which surged in 2021 and 2022, has declined in several markets as subcontractors cut profit margins to secure work. “I’ve only seen it one other time in my 25-year career where construction prices went down,” Dolan says. For developers with the right sites and the ability to move, the current environment offers a meaningful cost advantage, though one unlikely to last.

At the same time, raising equity remains difficult. Capital is available, but investors are selective. “The deals that are getting done are spectacular deals,” Dolan says. “It is one of the hardest times to raise equity in my career.” This dynamic has created an unexpected source of deal flow for DXD: projects initiated by less-experienced groups that underestimated the complexity of the business. An Austin deal Dolan describes illustrates the pattern. This well-located site had moved through two and a half years of entitlements under previous ownership, only to stall because the design, contractor selection, and site plan were misaligned with market realities. DXD stepped in to acquire the entitlements and reposition the project on its own terms.

The Unsexy Markets Thesis

One of the more counterintuitive aspects of DXD’s site selection strategy is its deliberate focus on markets that lack the profile of major growth cities. Markets like Austin, Denver, and Nashville attracted significant capital in the late 2010s and early 2020s, resulting in oversupply that has taken years to absorb. “The sexier the market, the more it got overbuilt,” Dolan observes.

By contrast, markets like Tucson, Reno, and San Antonio have drawn less speculative interest and, in some cases, still offer viable development opportunities. The caveat is that these markets can turn quickly. “San Antonio is on its way to potentially getting overbuilt,” he notes, underscoring the importance of ongoing market monitoring rather than static assumptions.

When evaluating a new site, DXD focuses on a tight set of indicators: current rents relative to what would justify new construction, existing occupancy across nearby facilities, and what is already planned or permitted in the submarket. “We go to extremes to understand what is planned, what’s coming online, what could come online in the future that would really erode that market,” Dolan says.

The Timeline Problem

One of the most persistent misconceptions among investors new to self-storage is the underestimation of how long the development cycle actually takes. From site identification to breaking ground typically runs sixteen months. Construction adds another twelve to fourteen. Lease-up takes an additional thirty to thirty-six months. “It just does take an enormous amount of time,” Dolan says. “Not a lot of other asset classes take that long.”

Unlike industrial assets, which can be fully pre-leased before construction is complete, self-storage generates no revenue until the doors open. That structural reality shapes everything from how DXD underwrites deals to how it communicates with investors. The fund’s current development pipeline is being positioned for exits in 2029 through 2031, a period when the firm projects rents will be near cyclical highs and vacancy near cyclical lows.

The Home Sales Connection

Beyond construction economics and equity availability, one macro factor often goes underappreciated in discussions of self-storage demand: home sales. Roughly 35 percent of self-storage customers are in the process of buying or selling a home. With U.S. home sales near a 30-year low, driven largely by the rate-lock-in effect, which keeps existing homeowners from listing, the sector faces a demand headwind that has persisted for several years.

“I’m more focused on home sales, because that’s something that’s just been very low for the last three years,” Dolan explains. The expectation is that transaction volumes will eventually recover, but the timing remains uncertain.

Building an AI-First Operation

DXD’s competitive positioning rests partly on its investment in data infrastructure and artificial intelligence. The firm employs two people whose sole focus is building AI tools and integrating data sources into decision-making processes. The goal is not automation for its own sake, but to develop a systematic advantage in site selection, the one variable Dolan consistently identifies as the true differentiator in self-storage.

The shift he describes is cultural as much as technical: moving from a default of hiring more people to solve operational problems, toward building tools that handle those problems at scale. “Companies that are not taking their steps in AI are going to be left behind,” he says, “and it will be reflected in the returns, the opportunities, the equity, the debt.”

What Comes Next

In late 2025, DXD launched its third fund, targeting $200 million with approximately 85 percent allocated to ground-up development. The timing is deliberately contrarian. “You want to be investing when others aren’t,” Dolan says. With equity markets cautious and many developers on the sidelines, the firm sees the current environment as the right time to build, even if the payoff is several years away.

DXD is also evaluating a shift toward in-house property management. The firm currently works with third-party operators, including Extra Space and SmartStop, both of which Dolan describes as setting a high standard. But he sees specific situations where managing directly would create additional value, and expects that transition to begin through 2026.

For investors weighing the self-storage sector, the picture Dolan paints is one where patience, specificity, and analytical rigor determine outcomes. The fundamentals are not flashy, but the discipline required to navigate them well is precisely what separates durable operators from those who discovered, too late, that picking the right site is harder than it looks.

About the Expert: Drew Dolan is Co-Founder, Principal, and Fund Manager at DXD Capital, a self-storage development firm. He has approximately 25 years of industry experience, with a background in engineering and construction sales prior to founding the company.

This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.