The self-storage sector appears to be settling into a more balanced state following years of pandemic-fueled activity, according to a new report from Cushman & Wakefield. Transaction volume during the last half of 2024 reached $3.2 billion—just 2.4% below the average for the same period from 2015 to 2019, suggesting a return to pre-pandemic norms.
Between 2020 and 2022, the sector saw a dramatic surge, with nearly $50 billion in deals—doubling the $25 billion recorded between 2013 and 2019. Cushman & Wakefield noted that the second half of 2023 was an outlier due to major M&A activity.
Property valuations in the self-storage industry have also come down from their highs. After peaking at $172 per square foot in late 2022, prices declined over six consecutive quarters to $139 per square foot in mid-2024. However, there are signs of a rebound, with prices nudging up to $141 per square foot, according to Real Capital Analytics.
Cap rates for top-tier facilities in major markets have climbed from around 4% in early 2022 to between 5% and 6% by mid-2024. This mirrors broader trends across commercial real estate as interest rates rose—driven by the Federal Reserve’s tightening policies, which pushed the federal funds rate to 5.25%.
Though the Fed cut rates by 100 basis points in the latter half of 2024, new tariff policies could limit further rate reductions if inflation concerns linger, the report warns.
Occupancy in the sector hovered near 90% throughout 2024, impacted by elevated interest rates, sluggish home sales, and growing supply. Physical occupancy typically ranges between 85% and 92%, with economic occupancy trailing by 5% to 10%.
Rents, which declined earlier in the year, have started to show signs of stability. In July 2024, asking rents were down 4.1% year-over-year at $16.40 per square foot, but by December, that drop had narrowed to just 2.3%. Momentum continued into 2025, with February rates down only 0.8% from the previous year. Impressively, 11 of the top 30 metro areas posted year-over-year rental growth during this period.
Source: GlobeSt.