From 2020 – 2022, units were leasing fast, new facilities were being built, and investors were eager to buy. That stretch of growth was strong, but it wasn’t likely to last forever. Now, with more inventory available and borrowing costs up, everyone—from property owners to buyers—must pay closer attention to operational details and where things might head next.
Vacancy Is Climbing—But There’s Context
The days of instant full occupancy may be behind us, but stabilized assets remain strong performers. For owners or investors evaluating a project, it’s smart to underwrite conservatively, using more moderate rent growth and vacancy assumptions.
Rent Growth Has Slowed—but Remains Positive
After a stretch of significant rate hikes, lease rates across the market have largely leveled out. This is not bad news—it’s a return to historical cyclical occupancy trends that can feel frightening to those who have only recently entered the storage sector. And in many cases, stabilized properties are still seeing incremental gains.
One area gaining traction in Montana is climate-controlled storage. For years, Missoula lacked the data to support meaningful demand for climate space. But that’s changing. Whether due to shifting demographics or tenant awareness, the premium for climate is becoming more supportable, especially in newer or well-located facilities.
Seller Expectations Remain High, But Buyers Are Looking
There’s still plenty of investor attention on Missoula, and many are actively looking for the right opportunity. The slowdown in deals isn’t about demand—it’s about the cost of capital.
For the past two years, Sellers have been holding out for values that made sense when money was cheaper. We’re starting to see Sellers start to come to terms with where we perceive debt service will be for the foreseeable future. A few sales are happening, often thanks to creative terms like seller financing. Still, many potential deals are stuck in limbo because the numbers don’t align.
When pricing matches current market conditions, buyers are ready to move. Until that gap narrows, many are staying patient.
Insurance: An Underestimated Risk
One factor affecting deals—and often underestimated—is insurance. Rates have jumped dramatically in the last year. For many properties, updated premiums are significantly higher than historical operating costs, putting pressure on pro formas.
Owners considering a sale should review insurance quotes early in the process. Surprises late in due diligence are derailing more deals than ever.
New Development Is Slow and Highly Selective
Don’t expect a wave of new facilities in 2025. Land constraints, zoning challenges, and community resistance have made central Missoula nearly unsuitable for ground-up self-storage development.
Instead, most activity is happening on the fringes—in areas like Highway 93 and the outskirts of town. That keeps competition low for well-located infill assets, particularly those with stabilized operations and good visibility.
Trends to Watch in 2025
A few trends are shaping storage in Missoula:
Increased demand for Class B and C product, especially from investors priced out of newer facilities.
Concierge storage services are rising, offering pickup and delivery for tenants who want convenience over access.
Generational personal property ownership continues to drive long-term tenancy, especially for RV and boat storage or units passed through family transitions.
These shifts reflect a maturing market where operations, location, and efficiency matter more than ever.
Looking Ahead: Stability Requires Strategy
The local self-storage market is no longer overheated. The current, more stable environment rewards owners and investors who understand the asset class, keep expenses in check, and align pricing with what the market supports today.
For those considering a sale, it may be time to revisit valuations with fresh eyes. For buyers, patience and flexibility will open doors. And for developers, targeted, high-demand locations with the right mix of unit types are still worth pursuing.
Have questions about your facility’s value, performance benchmarks, or what’s next in Missoula’s storage market? Let’s connect. I’m always happy to review your numbers, talk through the trends, or walk your site.
