Self Storage Rides the Wave of America's Multifamily Growth

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Good morning. The US is in the middle of a historic apartment construction boom, and self storage is growing right alongside it. As living spaces shrink, more renters are turning to off-site storage.

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• 2025 tax deadline coming up: 100% depreciation pass-through to LP investors with Hearthfire Holdings’ Class A self-storage property managed by EXR. Class A returns 2.7X EM, 23% IRR until 9/15/25. (sponsored)

• Housing crunch: The Trump administration may declare a housing emergency as it pushes to cut costs and boost supply.

• Price uptick: US CRE prices rose in July for the first time in five months, fueled by big  institutional deals and cautious optimism returning to the market. 

• Leadership shift: Fannie Mae has seen a wave of senior women leaders and DEI roles cut under FHFA Director Bill Pulte, marking a sharp cultural and governance shift. 

• Tariff effect: Rising US tariffs on steel, aluminum, and other materials are driving up commercial construction costs, squeezing developers and pushing rents higher for tenants. 

• Shopping spree: Retail sales jumped 18% YoY as investors shifted focus, while multifamily and office posted bigger deals but fewer transactions. 

• Office upside: Investors are pivoting to distressed office while multifamily grapples with oversupply and a forecast 15%–20% correction.

• Tax boost: Permanent 100% bonus depreciation could unlock sidelined investor capital while reshaping low-income housing tax credit financing. 

• Trouble in Texas: More than $700M in Texas CRE loans—mostly tied to multifamily—are set for foreclosure auctions this month, with Houston hardest hit. 

• Record sale: Greystar sold San Jose’s 948-unit Park Kiely complex for $370M, the South Bay’s biggest multifamily deal of 2025.

• Grid lock: AI-fueled data center growth is booming, but power shortages are pushing projects into secondary markets.

• Port push: Leasing at the Port of NY & NJ jumped 76% in early 2025, though rising vacancies, softer rents, and tariff uncertainty cloud the outlook.

• Incentive gap: Despite cheap power and strong infrastructure, Colorado is missing out on the Rockies’ data center boom as hyperscale developers chase tax breaks in Utah, Wyoming, and beyond.

• Tracy trade: Prologis sold a 284K SF Tracy, CA, industrial facility for $42.4M, as Central Valley industrial investment tops $762M YTD.

• Pricing power: Single-tenant retail net lease sales rose 10% in 1H25 as investors chased high-credit tenants, even as store closures widened the gap between Class A and B/C assets.

• Retail ruins: Frazer Township is suing Namdar over Pittsburgh Mills’ neglect, with fines and lawsuits piling up.

• Low cost leader: Aldi will add 200 U.S. stores in 2025, including its biggest yet near Times Square.

• Leasing rebound: Manhattan office leasing jumped 20% in August to 3.7M SF, putting 2025 on pace for its strongest year since 2019. 

• Rising revival: AI firms are fueling San Francisco’s office rebound as investors buy discounted towers and Hines plans a record 1,225-foot skyscraper. 

• Tower trade: Norges Bank and Beacon Capital Partners scooped up Midtown’s 1177 Sixth Avenue from Silverstein and CalSTRS for $571M in an all-cash deal. 

• Firm fundamentals: Houston’s office market posted the nation’s largest vacancy rate decline this year, with strong development and investment activity keeping fundamentals steady. 

• SoHo surge: Midtown South’s office market is bouncing back as conversions and new tenant demand drive availability rates down and push rents past pre-pandemic highs.

• Guest choice: Short-term rentals keep expanding, especially in suburban markets with larger homes, but hotels still dominate in urban areas on value, cleanliness, and location.

📈 CHART OF THE DAY