Demand for self-storage properties continues to strengthen, but mounting supply pressures are a growing concern, according to Marcus & Millichap’s midyear 2017 outlook for the self-storage industry.

Although new supply has not been enough to overwhelm pent-up demand, construction may have a greater impact in the future. The 2017 U.S. Self-Storage Midyear Outlook notes: “Positive demographic trends and the strength of the multifamily market will stimulate further need for storage space. Strong population growth and rising incomes foster a broad and widening tenant pool. In addition, the retirement and downsizing of baby boomers, plus the continued emergence of millennial households, will sustain demand for self-storage space.”

The report notes tightening of U.S. vacancy — which reached a historical low this year — will be a problem for investors in the face of supply-side headwinds, which may lead to additional concessions and a softening of reven