You want to win, but you want the other side to feel they want to, right? You need to sit down and the first thing you have to figure out in the negotiation is what's important to the other side. And that way you can make the tradeoffs and create a deal where the counterparty also won and also got something out of it.
On Inside Extra Space Storage, we sit down with the experts building, operating, and scaling Extra Space Storage to not only be the world's largest self-storage operator, but one of the most trusted names in the industry. If you care about where Extra Space and the self-storage industry is headed, you're in the right place. Welcome to Inside Extra Space Storage, a podcast where we bring on our leaders and we talk about leadership and business and self-storage. And we now have the leader, we have our CEO on with us. So, thank you for joining us, Joe.
My pleasure. We're glad to be here.
Joe has been CEO of Extra Space for around 10 years now. So the entire time I've been here, you're my only CEO. But you've been working with Extra Space since 1998. Is that correct?
Yeah. In all different roles, but since 1998 when we had 12 stores.
Wow. Wow. Yeah. That's a lot of growth that you've seen over that time. And we are just coming out of our Q1 2026 earnings. So we're gonna start by talking a little bit about the industry, the state of the industry and our earnings kind of dated to this time. For anyone joining us after and listening after, this is as of Q1 2026. But to start, how would you describe the state of the self-storage industry right now?
We're in the recovery period, right? If you go back a few years, storage was a winner and outperformed during COVID. We had kind of unprecedented growth at the stores, revenue growth, NOI growth, unprecedented FFO growth. That attracted a lot of capital to the sector, a lot of development, and then we've had three years where, you know, we've been on more of a down cycle. Now, a down cycle for self-storage is flattish to slightly positive. And that's one of the tremendous things about our property types, right? There's a lot of office owners or mall owners or hotel owners that, you know, would love it if their worst years were flat.
Yeah. We're looking at our down cycle and being like, 'Oh, our dreams would be that down cycle.'
Exactly. Exactly. But we're clearly on the recovery stage of the cycle. We've had positive new rates to new customers for about 11 months now. We had a couple quarters now positive revenue and NOI and so we're feeling better about things.
Good. Good. So coming out of our earnings, what's your like one minute highlight of our earnings? What's like the couple lines the headline that you wanted people to take away from our earnings report?
Well, we led the industry in revenue growth. We had very solid expense growth. We beat our expectations and Wall Street consensus on every metric. So, it was really a home run of a quarter. It was very, very good.
It's nice. It's nice to have a good quarter. When we're looking a little more in depth, are there any questions that have been surprising you from analysts from Wall Street after this earnings report? Anything you're like, they should be asking about this or anything where you're like, they're asking about this and you know, we should be looking over here.
Well, the most common question we get is given your outperformance in the first quarter, why didn't you raise guidance? And the answer is twofold. One is we're not into the leasing season yet. We all know the importance of kind of May through July for our full year results and it seems a little premature to raise guidance before we get through the leasing season. And the second is we do have some, you know, macro risks that we didn't count on in the beginning of the year when we set guidance. We didn't predict a war. You know, four, five, six dollar gas prices depending where you are in the country, inflation, low consumer confidence, and hopefully for a lot of reasons, all that ends soon, but that is a risk to our future performance.
Yeah. And how are we looking at those macro risks?
So, it's kind of interesting. I would have guessed that we would have seen all of that flow through into customer behavior. And we really haven't so far. Bad debt is actually down at 1.5% down from 1.7% at the end of the year. Customers are accepting ECRI at the same rate that they have historically. Vacates are very low, historically low. So we haven't seen the customers pull back yet.
Yeah. So customer strength is kind of if anything a little better than
A little, yeah. Oddly, right? But we'll see, you know, how long these inflationary pressures go on until the consumer decides I can't afford a storage unit or I can't afford that size of a storage unit or whatever.
It's interesting that investors had questions about our guidance and resetting our guidance early on. We had our guidance higher than our peer average. What had you so confident at the beginning of the year that we could hit above peer average guidance?
Well, we have a very in-depth and sophisticated process to create our guidance, you know, from the stores up to the FP&A group and the pricing group and the data science group and the operations team and lots and lots of input and I have tremendous confidence in the team and their expertise and their ability to produce accurate numbers. So I rely on them and am very comfortable doing so.
Yeah. Yeah. We do have a ton of data at our company that we use. How do you look at the Extra Space culture around data and around our technology?
So we were an industry leader in leaning into technology for a number of reasons but you know we were with Google when they just started and doing beta testing with them and that's why we're on one of their advisory committees. I think we're the smallest company and have a really close relationship to them and it's always been very important to us and we've made the appropriate investments and tried to be innovative and lean in and try new things and it's created a competitive advantage for us.
Yeah, I say we love to talk about innovation here as one of our values and a key part of our culture and I think that technology piece is really interesting to hear leaders speak to. But if I can pivot a little bit to our growth strategy. Whenever you talk about growth, you like to use the word accretive. Can you tell me what accretive growth means to you and how you look at our growth strategy?
Sure. Our job is simple and it's to make money for our shareholders. It's not to be big. It's not to do exciting deals. It's not to do activities that don't create long-term value. So we want to grow this company. Scale is important and an advantage in the self-storage industry, but we just don't want to be the high bidder and go out and buy things because then we're going to destroy our shareholders value, not increase our shareholders value. So, accretion is the word that is used in this industry to represent creating value for shareholders.
Yeah. Yeah. I every now and then as the comms person, we get into little word things where it's like I know Joe always wants to say accretive growth, not just growth. And I also know I love to be like, 'We're the largest in the industry. So fun.' And you're always like, 'Not the largest, the best.' Like you're, you know, the goal is never the biggest for you. It's always to be the best operator.
Well, McCall, I remember when we had that celebration after we merged with Storage USA and you or your team made those t-shirts, Life Storage. Thank you. When they merged with Life Storage and you and your team made those t-shirts for our food truck celebration that said world's largest self-storage company and I told you to box them up and send them to South America with the New York Giant Super Bowl t-shirts.
Little did you know what I originally pitched was Universe's largest self-storage. So
The difference between the PR person and the CEO in our strategy setting. So you didn't listen to me. We still have those t-shirts around, but being the biggest is not as important as being the best. And being the best means creating the most value for our shareholders, being a great place to work for our employees, and being sustainable.
Yeah. Kind of going off of the being the best place to work for employees, what do you think makes Extra Space a great employer? Like what do you think is our secret sauce for hiring and maintaining or retaining great employees?
So, I think we all care for each other and we all treat each other the way we would want to be treated. And that has to be the same if you're, you know, an assistant store manager who's been here for three months or if you're a senior VP who's been here for 20 years. You deserve the same amount of respect. You deserve to be treated properly. You deserve a voice at the table. You deserve a career path. You deserve honest communication. You're part of the team. And if we can all treat each other that way, then people will enjoy coming to work and get something out of it and give more into it. And I think as we've gotten bigger and bigger and bigger, all of us, not me, have done a good job with that.
Yeah. When I think of, you know, especially that idea of bringing your voice to the table, like we have opportunities where you guys are out meeting with store employees. You know, everyone, we have a super open door policy here at the office. Like I have seen, you know, analysts who are maybe a couple months in just walk into your office to have a conversation with you in a way that you're just like, 'Yeah, this is the kind of culture we have where every voice matters and every person can bring up an idea.' So, it is cool to see that it's not just we can say it, but it's also in practice really interesting, which takes me to kind of a personal question, which is I also know that you answer your emails so quickly in emails from all kinds of employees on all different things. What is your email inbox strategy? How are you responding to all these employees so quickly?
Clear it out. Don't think about it. Just don't let the backlog build up. Just keep it going.
I do some things well, I do some things not so well. One thing I do well is take in process information very quickly and so I don't have to think about things a lot. I can just move on to the next one.
Yeah. And for people who don't know, Joe's background was a lawyer. You went to law school. And with that, yes, you are extremely quick at reading and giving feedback. And if you didn't want to have your business career, I think you could have made a great copy editor because I will occasionally get things back from you and I'm like, 'How did he see a comma? How did he?' You're just very quick with the reading and the writing, which is interesting.
I don't know if this is a compliment or not, McCall.
No, no, no. That's not what it let it be also a jab that it's too many red lines for your comms. No, no, no. But it is interesting to see because you talk about like we have grown so much in the past 10 years especially. I mean when I started we were what 4,000 less than 4,000 employees, 3,000 employees. Now we're over 8,000. Like that is a lot of growth to be able to maintain an open door policy with employees but also to maintain this culture. How do you think about maintaining our company culture as we grow?
I think it's two things really. One is to talk about it like we're doing right now, right? And to make sure when we hire people, we hire people who exhibit those values that we cherish and talk about them and talk about them in meetings. I've been in plenty of meetings where we've made a decision and someone will say, 'Is this decision consistent with our values?' And that's important to do. So, we always have to keep them in front of mind. And secondly, everyone in the company has to be the guardians of our values. And what that means is one, they have to live our values, but two, they have to be willing to raise their hand and say, you know what, what I just saw or what that person just said or this thing we're about to do is not consistent with our values. Let's think about it again. Because I can't be the keeper of the values. Everyone has to be. And if everyone, you know, takes on that burden or that mantle, then we have a shot of as we become bigger and bigger, not becoming the big bureaucratic machine where people are cogs in a machine. That would break my heart. We can't do that.
Yeah. We have to maintain our team effort, right? With that, we've obviously had a lot of growth, which has created a lot of opportunities for people in this company to grow and take on new roles. And I think that's going to continue. What advice do you give to new managers? Someone taking on maybe managing a new project for the first time or managing people for the first time. Do you have kind of some set advice that you give?
Sure. I mean, you need to work hard and be excellent at your job. You need to constantly ask questions. Don't be afraid to say, 'I don't know this. Can you teach me this? I know I asked this before, but I still don't quite get it.' No shame in any of that. Admit your mistakes. Boy, I think I did this wrong. I made a mistake. Teach me how to do better. Keep learning. Reach out to people. Ask questions. One thing I love about Extra Space is, you know, people can get a phone call from someone they've never met before in the organization, say, 'Hey, I think maybe you could help me. Would you answer this question?' And people will help each other.
Yeah. Yeah. It's a super collaborative environment. And generally like we really do have good intent for each other. And also we all treat each other as if every inquiry is with good intent. And that just that level of trust I think makes it so easy to operate sometimes even when I over mark up your documents.
I know that your intent is that every comment is perfect and I do need them to be perfect.
Thank you. I'm going to pivot to like a couple kind of more personal motivation questions. So you are always talking about you know the company improving and us doing better and you have this very strong drive towards improvement. Where does that come from? Where does your drive come from? Personally,
I don't know. It's inherent. I think I've always had it. I'm a very competitive person. I would like to win and I want the company to win and I think I just have this drive.
Yeah. I say and part of your background that occasionally has come up is that you played college football. Is that another competitive thing. Do you think that playing on a team sport at a high level was part of setting you up? Is there anything that you learned from that that you've brought into your work even to this day?
So, I think any team sport is a great training ground for collaborative work like we do. I think football in particular is the ultimate team sport because
You have no bias as you say it. Just kidding.
No, it's the truth though. You know, most of the people on the field are invisible, right? They're not the quarterback, whatever. The amount of practice and work time compared to the amount of time you actually play the game is so disproportional. I mean, you have to put in hours and hours and hours of work for every minute you get to play the game. And I think that's good training for business and for a career.
Yeah. Yeah. It's a different mindset they have to be in. I mean, I would say basketball is the best team sport, but we can move on. We can move on from that. My other kind of personal question is what is something you're super proud of outside of work that you've accomplished or that you just look at and you're like, 'Ah, I'm so proud of that.' Because I know there's so many things here that you're very proud of our team, the mergers that we've done, our growth, all of these things but what's something outside of work that you're proud of?
