Extra Space Storage will acquire Life Storage in an all-stock transaction valued at about $12.7B.

The combined portfolio will be the largest in the country by number of locations, according to the companies, with a total of more than 3,500 nationwide totaling more than 264M SF. The market cap of the combined companies will be about $36B.

“This is an industry where scale really matters,” Extra Space CEO Joseph Margolis told The Wall Street Journal.

Under the terms of the deal, Life Storage stockholders will receive just under 0.9 Extra Space shares for each share they own, or $145.82. Life Storage gained about 3.3% in value on Monday, and it is up more than 40% since the beginning of 2023.

Previously, Public Storage, another self-storage giant, made an $11B unsolicited offer for Life Storage. That all-stock offer was worth about $129 per share.

For now, and until the Extra Space-Life Storage merger is complete, Public Storage is the largest owner in the sector, with about 2,800 units nationwide. Life Storage has about 1,200 units.

As a real estate niche, self-storage experienced a boom in the last decade, as Americans decided they needed more storage space and high prices drove renters to ever-smaller units. The market has calmed down recently, though it is still strong.

Self-storage occupancy rates will mostly hold steady in 2023, Matthews Real Estate forecasts. Average self-storage occupancy came in at 92% for 2022.