Secondary markets that never attracted headline investment are now outperforming the tier-one cities that dominated self-storage development a decade ago. That is the view of Drew Dolan, Co-Founder and Fund Manager at DXD Capital, an active developer tracking supply pipelines nationwide.
Dolan argues that in self-storage, location is everything. Picking the right site is far more consequential than construction quality or operational efficiency. His firm has spent years building data and AI-driven systems specifically to identify where others have not yet looked.
When Top Markets Got Overbuilt
Austin, Texas; Denver; and Nashville, Tennessee were the top self-storage investment markets from roughly 2017 through 2020. Capital flooded in, new facilities multiplied, and occupancy rates softened under the weight of excess supply. Dolan says the pattern was predictable in hindsight.
“The sexier the market, the more it got overbuilt,” Dolan says. “Austin, Denver, Nashville — those markets have been off the table for a long time.”
Investor attention and market attractiveness tend to move together. When a city generates positive press, strong job growth, population inflows, and a vibrant downtown, capital follows. In self-storage, new supply can be delivered relatively quickly, and the product is essentially identical regardless of location. That capital concentration produces oversupply more quickly than in more complex asset classes. The most-watched markets become the least investable.
The Case for Overlooked Markets
Markets that escaped the overbuilding cycle did so precisely because they lacked the narrative appeal that attracts speculative capital. Cities like Tucson, Arizona; Reno, Nevada; and San Antonio never generated the same investor enthusiasm. As a result, their supply pipelines remained more disciplined.
“Those are the markets that did not get overbuilt, and those are the markets where the opportunities still exist,” Dolan says.
For developers willing to look past the absence of a compelling city story, these markets offer reasonable existing occupancy, supportable rents, and limited near-term competition. These are the core inputs Dolan evaluates when assessing any new site. A market that institutional capital ignored is one where supply and demand have had a chance to remain in balance.
When Opportunity Windows Close
The contrarian thesis carries its own expiration date. Once a secondary market is identified as an opportunity, the same capital dynamics that led to overbuilding in Austin can play out in Tucson or Reno. Dolan is direct about this risk.
“San Antonio’s on its way to potentially getting overbuilt,” he says. “So you’ve got to be very careful.”
This creates a narrow window for developers who move early. The advantage belongs to operators who can identify supply-demand imbalances before they become widely recognized, accurately underwrite pipeline risk, and execute before the next wave of capital arrives. For investors, Dolan’s view suggests that market selection is the primary driver of outcomes. A well-built facility in an overbuilt market will underperform a modest facility in a supply-constrained one.
How Developers Track Supply Risk
The window for opportunity in any secondary market depends on how accurately a developer can read pipeline risk. That means tracking not just existing competition but planned and potential future supply, the inventory that can erode a market’s fundamentals before a new facility ever opens.
“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.
Rents and existing occupancy rates are the starting point for any site evaluation. But those figures can shift quickly once new supply enters a market. That is why developers who move early into secondary markets hold a timing advantage, and why that advantage shrinks the moment a market becomes widely recognized.
The Austin market illustrates how overlooked pockets can survive within otherwise saturated cities. Dolan’s firm identified a submarket it had tracked for years and stepped in after a prior developer completed entitlements with the wrong product design. Once-overbuilt markets can recover, and patient developers who maintain long-term coverage of specific submarkets are well positioned to act when such opportunities arise.
About the Expert: Drew Dolan is Co-Founder and Fund Manager at DXD Capital, a self-storage development firm focused on ground-up development.
This article is intended for informational purposes only and does not constitute legal, financial, or investment advice. The views and opinions expressed herein reflect those of the individuals quoted and do not represent an endorsement of any company, product, or service mentioned. Readers should conduct their own due diligence and consult qualified professionals before making any investment decisions.
