🚨The self-storage sector is stabilizing with economic factors encouraging a balance between demand and supply. Transaction volume for H1 2025 is flat at $2.85 billion, mirroring pre-2020 levels. Average property values have decreased by approximately 12% since Q1 2023, reaching $159/sf as of Q2 2025. While supply growth has slowed to 2.5% annually, occupancy rates have steadied around 90%. This stabilization supports steady cash flows for investors despite modest value compressions.
Transaction Volume: $2.85 billion, H1 2025
Price per SF: $159, Q2 2025
Average Cap Rate: ~5.8%, 2024-25
New Supply Growth: ~2.5%, 2025
Loan Performance. Current DSCRs are generally adequate with debt yields aligning at 9–10%. Interest coverage is manageable given the NOI consistency, indicating lower refi stress compared to other CRE sectors.
Demand Dynamics. Absorption rates are steady, supporting high occupancy in the low 90s%. Small concessions are regional, with coastal markets outperforming.
Asset Strategies. Shift towards customer retention and operational efficiency is necessary. Implement localized strategies in underperforming markets to maintain occupancy levels.
Capital Markets. Investor sentiment remains positive albeit at lower pricing levels. Cap rates averaging 5.8% yield strong relative returns, stimulating acquisition activity.
Rates/growth show modest ascent amid stable demand.
High-barrier markets maintain lead over oversupplied zones.
Conservatively underwrite with 0–3% annual rent growth.
Spreads provide attractive financing vs cap rates.
🛠 Operator’s Lens
Refi. Opportunities are optimal with stable cap rates and firm NOI.
Value-Add. Align capex with tenant demand; focus on revenue-sustaining improvements.
Development. Review pro formas for new projects; halt plans if assumptions rest on prior peak demand.
Lender POV. Favorable views persist; continued liquidity expected unless marked rate shifts occur.
Continued low single-digit rent growth into 2024.
Watch for potential upticks in occupancy from slowed construction.
Monitor interest rate moves for cap rate impacts.
Trepp CMBS Conduit Weekly BBB, Trepp — Self-Storage Supply and Performance Metrics (2025), Yardimatrix — Storage Demand and Occupancy Rates (2025).
