Self-storage, an early pandemic wunderkind in commercial real estate, continued its steady decline in March, with rents dropping 4.5% annually, according to Yardi Matrix.

Rents hit $16.25 per SF, showing declines for both climate-controlled and non-climate-controlled properties, the company found. REITs dropped their rates to attract new customers and smaller operators were pressured to do likewise.

Demand has dipped so drastically that last year developers abandoned 245 self-storage projects, more than twice the number in 2022, according to Yardi Matrix.

Self-storage demand has dropped just as new supply, spurred by a boom in demand during the worst of the pandemic, came online, according to Yardi Director of Research Tyson Huebner. U.S. growth markets such as Atlanta and Phoenix are particular hotspots for the supply-demand imbalance.

“It was really attractive in the moment, but as soon as you go through planning, building, by the time you deliver, you’re kind of in a different market,” Huebner told The New York Times.

There is still development in the pipeline, however. Self-storage construction as a percentage of existing inventory remained unchanged in March at 3.7%, Yardi Matrix reports.

“Despite weak street rate performance and a tight capital market, it appears there is still quite a bit of developer interest in self storage,” the company noted.

In the wake of the pandemic-era boom in the sector, there has been consolidation. Public Storage bought Simply Self Storage from Blackstone Real Estate Income Trust last year for $2.2B after spending more than $10B during the previous four years buying other self-storage properties. In the last year, Public Storage stock has dropped about 10%.