- Self-storage fundamentals are stabilizing, as occupancy remains high and rent growth gradually improves.
- Limited new development continues to support the sector’s medium-term stabilization and growth outlook.
- Green Street now expects sector net operating income (NOI) to stabilize in 2026 and return to growth in 2027.
- Valuations have improved alongside fundamentals, limiting relative upside for investors.
After several years of pressure, self-storage fundamentals are beginning to stabilize, though the sector has yet to enter a full recovery. Elevated mortgage rates and historically low home sales continue to weigh on housing-related demand, while resilient occupancy, improving move-in rents, and limited new supply are supporting performance.
Demand conditions continue to improve but are still below historical norms. Home sales remain near multi-decade lows, limiting a key driver of customer turnover, yet occupancy has held around 93%. Green Street’s upgraded 2026 NOI outlook now calls for flat year-over-year sector NOI before growth resumes in 2027.
Steig Seaward
Improving operating conditions point to continued stabilization across the self-storage sector.
Supply remains one of the sector’s strongest supports. Elevated construction costs, expensive land, and underwriting uncertainty continue to constrain new development, keeping annual supply growth modest at roughly 2% through 2030. The combination of muted deliveries and resilient occupancy should gradually improve pricing power as markets absorb recent additions.
Investor sentiment is improving alongside earnings expectations, but pricing already appears to reflect much of the sector’s recovery. With average cap rates near 5.4% and expected returns trailing those of other property sectors, further upside may be more limited unless operating fundamentals continue to outperform current expectations.
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