Self-storage lease-up to full stabilization now often runs four to five years instead of the two-to-three-year timelines baked into COVID-era pro formas, Tom de Jong, Executive Vice President at Colliers, told citybuzz on August 18, 2026. That stretch is wide enough to reshape which exit tranche merchant builders choose, with certificate-of-occupancy sales gaining ground as developers trade lease-up risk for price certainty today.
The shift lands as Yardi Matrix's August 2026 national report shows advertised street rates still down 1.6% year over year in July while occupancy improves on fewer move-outs, not stronger demand. Developers who underwrote two-year stabilization paths are holding assets longer than planned. CO sales are the mechanism to exit before absorption catches up.
Why Did Lease-Up Timelines Stretch to Four or Five Years?
de Jong's August 18 framing is blunt: COVID-era builders expected stabilization within two to three years. Current absorption often needs four to five years to reach economic rents and full occupancy.
Three forces explain the gap:
Supply overhang in key metros. Yardi Matrix tracked 44.1 million net rentable square feet under construction nationwide in July 2026, with Phoenix still leading at 6.6% of existing stock despite month-over-month contraction. New deliveries in oversupplied corridors extend lease-up even when national starts have cratered.
Housing turnover remains muted. Fewer household moves mean fewer natural storage customers. Yardi Matrix's Q2 2026 REIT analysis noted year-to-date gains driven entirely by fewer move-outs, not stronger inbound demand. Developers counting on move-driven demand are waiting longer.
Promotional pricing extends the ramp. Buyers underwriting CO deals price from today's rents and occupancy, not the seller's spreadsheet. Discounted move-in rates that worked in 2021 take longer to roll up to street.
Recently, it's taken four or five years to get to full stabilization at economic rents and full occupancy. So you're taking risk off the table, essentially. You're trading risk for a potential reward down the road.
- Tom de Jong, Executive Vice President, Colliers
How Does the Three-Tranche Exit Model Work?
de Jong describes a tiered merchant-builder playbook refined over recent years:
| Tranche | What sells | Risk transferred |
|---|---|---|
| Entitled land | Shovel-ready site | Entitlement and construction risk |
| Certificate of occupancy | Completed, empty building | Lease-up and stabilization |
| Stabilized asset | Market rents, full occupancy | Minimal operational risk |
The middle tranche matters more when lease-up timelines lengthen. A developer who misses its land-sale target builds, then offers the asset at CO. If the CO price clears the hurdle, the builder exits before carrying four or five years of lease-up.
de Jong summarized the sequence:
They would buy the land, take it through entitlement, and maybe they would offer the land for sale entitled. If they didn't sell it, they would build it, and they would offer it for sale at certificate of occupancy. And if they didn't sell it for their number, they would fill it, and then they would sell it.
Each stage carries a different risk profile and expected return. CO is the decision point where lease-up duration determines whether holding beats selling.
What Does a Representative CO Sale Look Like?
de Jong offered a simplified math example in his August 2026 comments:
| Line item | Amount |
|---|---|
| Stabilized value (hypothetical) | $30 million |
| CO sale price | $22 million |
| Buyer capital and interest reserves | ~$2 million |
| Buyer all-in cost | ~$24 million |
| Spread to stabilization | ~$6 million |
The buyer captures the spread if lease-up executes as planned. The developer locks $22 million today instead of betting on $30 million in four or five years while paying debt, management, and marketing costs.
de Jong's core trade:
If you can get a number certain today versus a potential number in a few years, how much of that are you willing to give up? And that's different for every individual or developer.
When absorption ran two to three years, holding often won. At four to five years, certainty compounds.
What Did Colliers Learn From the Chula Vista Deal?
de Jong pointed to a recent Chula Vista, California transaction as a complex CO structure. Three adjacent parcels, small-bay flex industrial, industrial outdoor storage, and self-storage, shared access infrastructure costing nearly $10 million.
Rather than financing the road independently, developers built the self-storage component to buyer specifications and closed at certificate of occupancy. The buyer took full lease-up risk in exchange for cost-plus pricing and branding control from day one.
The buyers felt there was enough margin in the deal to buy the building at certificate of occupancy and take it all the way through lease-up until it gets stabilized.
The arrangement let the buyer set door colors, signage, and management platform before the first tenant arrived. That matters when lease-up runs years, not months.
The deal connects to broader California entitlement pressure. Chula Vista's Eastlake UTEX storage road-tax district fight shows how infrastructure and zoning politics inflate development costs on multi-parcel sites. CO sales can allocate shared-cost risk between builder and buyer when both parties see margin in the structure.
How Should Operators and Investors Read CO Sales in August 2026?
CO sales are not distress signals. They are capital-recycling tools when absorption math changes.
For developers: If your pro forma assumed 24-month stabilization and you are at month 18 with 40% occupancy, the CO bid is a real option, not a failure. Compare holding cost through year four or five against today's offer.
For buyers: Underwrite from live market data, not seller projections. de Jong said buyers credit 60% to 80% of the move-in-to-market rent gap, not 100%. Every buyer applies its own lease-up curve.
For lenders: Longer lease-up extends interest reserve requirements. Bridge lenders pricing 2026 buyer-window trades should align reserves with four-to-five-year paths, not 2021 templates.
For brokers: de Jong's De Jong Self Storage Team at Colliers has a $2 billion-plus transaction record across 32 states. CO expertise is becoming a specialty as timelines shift.
The Numbers Worth Writing Down
- Source date: August 18, 2026 (citybuzz interview)
- Speaker: Tom de Jong, EVP, Colliers; founding principal, De Jong Self Storage Team
- Prior stabilization assumption: 2 to 3 years (COVID-era underwriting)
- Current stabilization timeline cited: 4 to 5 years at economic rents and full occupancy
- Representative CO discount: ~27% below stabilized value ($22M vs. $30M hypothetical)
- Buyer rent-gap credit range: 60% to 80% of move-in-to-market spread
- Chula Vista shared infrastructure: ~$10 million access cost across three parcels
- National under-construction stock (July 2026): 44.1 million NRSF, 2.1% of existing stock
Longer Lease-Up Makes Certainty a Product
Self-storage developers built during the boom are not failing. They are facing absorption timelines their pro formas never modeled. CO sales convert that timeline risk into a priced trade.
Four or five years to stabilization changes every downstream decision: bridge loan sizing, equity hold periods, and whether the smartest exit is entitled land, empty building, or stabilized NOI. de Jong's August 2026 framing is the clearest public articulation of that shift from a broker who closes CO deals weekly.
Operators watching from the operating side should expect more freshly built inventory to trade empty. Buyers with lease-up playbooks and value-add acquisition strategies will keep bidding when the asset-level upside justifies the wait.
Sources
- Self-Storage Lease-Up Now Takes Four to Five Years, Reshaping How Developers Exit, citybuzz, August 18, 2026
- Yardi Matrix August 2026 Improving Occupancy, Slowing Supply, Your Ciao News
- Yardi Matrix Q2 2026 Fewer Move-Outs Recovery, Your Ciao News
- Self-Storage 2026 Buyer Window, Your Ciao News