Storage Wars: How prop data turned self-storage into an alpha machine
11:24The episode at a glance.
Summary
Drew Dolan discusses why self-storage has become an overlooked alpha opportunity in commercial real estate, driven by generational shifts in consumer behavior and significant supply constraints. He explains how DXD Capital uses data science and AI to identify supply-demand imbalances that larger competitors miss, while emphasizing that location selection—not operations—is the critical variable in self-storage success. The conversation explores the 4-year lease-up timeline that distinguishes storage from other asset classes, macroeconomic tailwinds including 70% lower new construction and rising millennial adoption rates (19% vs. 5% for boomers), and why younger generations increasingly view storage as a daily extension of their homes due to housing affordability pressures.
Guest
Co-Founder and Principal of DXD Capital, a data-driven real estate private equity firm focused exclusively on self-storage development. With 25 years in commercial real estate, Drew has developed and invested across office, multifamily, senior living, and industrial before identifying self-storage as a contrarian opportunity where proprietary data science and algorithmic site selection create sustainable competitive advantages.
In Drew’s words.
“The reason I love self storage is because if you nail the location, it doesn't matter who operates it because the operations are simple—the product's a commodity. That's where data works really well for our business.”
“19% of millennials have storage. When Gen Z gets 10 years older it'll be in the 20s. Baby boomers only use 5%. There's a macro trend of younger people using it more and more that will push the industry to new highs.”
“There is no good idea that is generally a substitute for somebody that has experience. I always say we learn more by making mistakes than we ever do by getting things right.”
“New construction is 70% below the deliveries at peak, and when you see that massive decrease, the risk of oversupply is much lower. You want to develop when other people are really struggling to get their arms around how to make it work.”
“Time solves almost every problem in self storage. But you've got to have the ability to have that time in order to solve them—it's a four-year investment, and something could go wrong.”
“Our tools and data analysis put us in a position to say no quicker to 10,000 deals and say yes to five, in the same time somebody else can say no to a thousand and say yes to two.”
“Younger generations can't afford everything they want, so they rent a one-bedroom but have two bedrooms worth of stuff. A storage unit costs $150 a month versus an $800 second bedroom—it's like renting a garage you can't afford on-site.”
“Being successful in our business is relationships. You can't expect to find everything on Google or ChatGPT. Get out there, interact, show up—that's how relationships get created.”
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