Are cap rates accurate for self storage?

A cap rate is simple, but using it correctly is not.

A cap rate measures the relationship between net operating income and value. In self storage, the hard part is not the formula. The hard part is making sure the NOI is real. Are rents achieved or advertised? Are discounts burning off? Is occupancy seasonal? Are payroll, insurance, taxes, repairs, management fees, and marketing normalized? Everyone operates their self storage facility differently so cap rate is often one of the most manipulated metrics in self storage. A owner-operated self storage facility is going to have a drastically different net operating income compared to a third-party managed facility resulting in different cap rates despite the gross operating income being exactly the same. Small assumptions can move value materially.

Are RV storage markets hyper local?

The national average can hide huge local differences. The RV and boat storage data shows Los Angeles parking rents up 12.8 percent year over year, New York-Connecticut up 11.4 percent, and Chicago up 7.7 percent. Meanwhile, several high-supply markets saw much slower growth. That proves the market is not one-size-fits-all. In urban metros, scarcity can drive rent growth. In markets with lots of new dedicated parking supply, rent growth can slow. For buyers, the diligence question is simple: is this a scarcity market or a new-supply market? A powerful strategy can be to look for markets where there are ordinances against parking RVs in your driveway or on the street. The presence of a prohibitive ordinance can provide a powerful demand driver for RV storage.

Is RV and boat storage having a moment?

RV and boat storage is not just extra land behind a storage facility anymore.

Parking rents increased 4.4 percent year over year to $6.38 per square foot in September 2025, with small parking units up 5.6 percent. That made national parking rent growth the strongest year-over-year change since Yardi Matrix began tracking parking rents. For investors, RV and boat storage can be attractive because it may require less building area, but it is still highly market-specific. Demand depends on local ownership patterns, zoning, land cost, security expectations, and competing supply. It’s important to consider RV and boat storage a luxury product. RVs and boats are very expensive and are more susceptible to economic factors as a result. It’s a luxury to have a boat or RV. If times get rough, those are items that are sold off more readily than furniture or keepsakes. As our economy performs, RV and boat storage follows.

Are business renters a different revenue opportunity?

A business tenant is not just a larger version of a household tenant.

The top business renter categories according to the 2026 Self Storage Almanac are computers and IT, retail, and manufacturing. Business renters use self storage for inventory, cited by 43 percent, and for office supplies, furniture, or equipment, cited by 41 percent. They also tend to need more space: 30 percent rent four or more units, 44 percent rent two or three units, and only 26 percent rent one. That means a facility near contractors, retailers, offices, trades, or e-commerce users may have a different revenue strategy than a purely residential facility. The business use of self storage is causing an industry growth point: pro units. These pro units are called by a variety of names: contractor units, small bay warehouse units, or maxi units. These larger than retail units allow businesses to rent one large unit vs. multiple smaller units. They can have additional amenities like utilities, multiple doors, higher ceilings, and more. As traditional warehouses get absorbed by fulfillment centers and other uses, pro units are filling a gap that business renters desperately need. Flexible space for a fast moving economy.

Do customers ask about price first?

Managers are taught not to sell only on price, but customers still ask about price first.

The 2026 Self Storage Almanac reports that 79 percent of consumer renters and 74 percent of business renters sought pricing information. That does not mean operators should race to the bottom. It means pricing must be easy to find, easy to understand, and supported by value. If your facility is cleaner, safer, easier to access, or better located, say so clearly. If your website hides price, many prospects will simply compare competitors who make the process easier. Customers are skeptical of pricing online that shows a drastic discount but no indication of what their rent will be after promotions expire. Be transparent and forthright with how rental rates will be experienced.

What are the most popular storage unit types?

Unit mix can tell you who a facility really serves.

More than half of consumer renters, 53 percent, and business renters, 58 percent, rent exterior access units, other known as drive-up. For consumer renters, the 10 foot by 10 foot has remained the most common unit size, with 5-by-10 units used by 21 percent of consumer renters. These details matter for site planning, acquisition diligence, and marketing. A drive-up facility may appeal to movers and small businesses. A multi-story climate-controlled facility may serve a different renter profile, typically a more densely populated urban market. The best operators match unit mix to local demand.

Why does answering the phone still matter?

In self storage, speed to lead can be the difference between rented and lost.

Fifty-seven percent of consumer renters rent from the first facility they contact, and 38 percent of both consumer and business renters first contact a facility by phone. That means missed calls are not minor operational issues. They are lost rentals. Whether you use on-site managers, remote management, a call center, or a hybrid model, the phone is still a core conversion channel. A buyer reviewing a facility should examine call logs, missed calls, lead response time, and close rates—not just occupancy.

Are mobile‑first websites no longer optional?

Your next tenant is probably not calmly browsing from a desktop computer.

Among renters who searched online, 58 percent of consumer renters used a smartphone, and that share increased nearly 8 percent from 2023 to 2025. That means your website must load quickly, show unit sizes clearly, present pricing cleanly, and make renting easy on a phone. A mobile site that hides pricing, buries the rent button, or loads slowly creates friction at the exact moment the customer is ready to choose. When designing your website and check-out process, it should be easier for customers to rent a storage unit than buy an airline ticket. Limit the amount of clicks and pages. For owners looking to sell, a modern mobile rental path can support stronger revenue and cleaner operational metrics since it will result in more conversions to rentals.

What do buyers miss in street rate versus achieved rate?

Two storage facilities can advertise the same rent and produce very different revenue.

When talking about self storage rental rates, it’s important to distinguish street rates from web rates from achieved rates. Street rates are what a customer might pay walking in today. Web rates can differ from street rates, typically with a discount to encourage self sufficiency amongst renters to reduce management man hours. Achieved rates reflect what tenants are actually paying after existing customer rate increases, discounts, and legacy pricing. The 2026 Self Storage Almanac notes that rates are back near 2019/2020 levels, and in Q2 2025 street rates were above achieved rates for all unit sizes. That matters because an acquisition cannot be underwritten from a rent board alone. You need a tenant-level rent roll, move-in rates, discounts, concessions, and existing customer rate increase history. Secret shopping the competition to determine if they are actually achieving street rates and what their occupancy is helps paint a more robust picture as you consider what the market can support for rental rate changes.

What are life company loans for self storage?

For stabilized storage assets, life company debt can be attractive—but selective.

Life company storage loans often target $10 million-plus loans, 50 percent to 65 percent LTV, DSCR of 1.40x or better, and competitive spreads over Treasuries or swaps. These lenders stress cash flow, cap rates, management quality, market stability, and asset quality. For borrowers, the tradeoff is usually lower leverage but potentially attractive long-term fixed-rate capital. That can be valuable for a stabilized facility where the goal is durable cash flow instead of maximum proceeds. Often life-co loans are assumable so if interest rates rise, the loan itself can become a valuable element of the overall storage investment when going to sell.

Why is construction financing harder than it looks?

Building self storage is simple to describe and hard to finance.

The 2026 Self Storage Almanac cites Yardi projections that new deliveries decline from nearly 57 million NRSF in 2025 to about 46 million in 2026 and roughly 42 million in 2027. It also notes that oversupply in some markets, rent volatility, and tighter credit have made construction financing harder. Lenders are scrutinizing sponsors, feasibility studies, budgets, rents, competition, absorption, and stabilization timing. Many construction loans are lower-leverage, floating-rate structures. A strong site is not enough. The sponsor must prove the project can lease, refinance, and survive rate volatility. We used to get construction loans at around 85% leverage. Now we are seeing 65% leverage on the high end for construction financing.

Does drive‑by visibility still drive rentals?

Digital marketing matters, but the old-fashioned drive-by still has real value.

Twenty-eight percent of consumer renters first learned about a facility while driving to or from home or work; this number has maintained over the years. Online search was also important, cited by 19 percent of consumer renters and 20 percent of business renters; 41% of renters begin their hunt for storage online with other avenues such as AI making up the difference. Regardless, the combination of those two primary sources tells operators something important: the best facilities win both offline and online. A high-visibility site with weak web presence leaks demand. A great website for a hidden, hard-to-access site has a different problem. Location, signage, traffic count, Google Business Profile, and website conversion all work together.

Why can temperature‑controlled storage be a premium product or unnecessary?

Temperature-controlled storage is not just a feature. In many markets, it is a pricing strategy.

The demand data says more than 30 percent of renters are willing to pay extra for air conditioning and heating. Supply also matters: only about 34 percent of 10-by-20 units are climate controlled. When customers value a feature and the market has limited supply of it, operators may have premium pricing potential. But climate control is not automatically profitable everywhere. It must match local income, weather, customer use cases, construction cost, and competitive supply. We view this from the flip side: if around 30 percent of renters are willing to pay extra for temperature controlled storage, that means around 70% of renters are not. We prefer to avoid additional costs during construction- often a 25%+ increase to building cost- and high operating costs- utility expenses and maintenance of HVAC- by focusing on single story, drive-up, non-temp controlled storage. It provides tenants the most convenience of being able to load and unload right at their unit while most stored goods don’t need temp-control. Really the question is not whether climate control is good. It is whether the local rent premium justifies the cost and we find in many markets it does not.

Where are self storage cap rates in 2026?

The 2026 valuation environment is more rational than the pandemic peak.

The 2026 Self Storage Almanac says Class-A institutional-quality assets in major markets are typically trading in the 5.0 percent to 5.75 percent cap-rate range. Secondary markets generally add a 75- to 100-basis-point premium, and tertiary markets add another 100 to 150 basis points. For owners, that means location, quality, rent growth, occupancy, and supply risk all influence exit value. For investors, it means a higher cap rate is not automatically a better deal. Sometimes it is compensation for weaker location, weaker management, or supply pressure. In our experience, we have found 7% cap rates to be the middle of the road in 2026. Buyers are interested in existing financials and less on pro forma. Banks are relying more on debt service coverage ratios or yield. There are still instances where significant value add allows buyers and banks to come in at lower cap rates, but conservative purchasing is still prevalent. 

Is new RV and boat storage supply slowing?

The RV and boat storage supply pipeline is cooling after a busy development cycle.

After record levels of new development from 2022 to 2024, dedicated RV and boat storage supply delivered in the trailing 12 months fell to 3.8 percent of inventory in September 2025, down from 5.3 percent a year earlier. That matters because slower new supply may support rent growth in markets where demand remains strong. But the opportunity is still local. If a submarket already added too much parking inventory, rent growth can remain weak even if national construction is slowing.

Are self storage rental rates recovering?

The rate story is not all bad, but it is not a straight-line recovery either.

From Q4 2024 to Q2 2025, rental rates increased across all unit sizes and climate types. That suggests some pricing power may be returning. But year over year, the data still showed rental rates down 1.61 percent for non-climate-controlled units and down 2.63 percent for climate-controlled units. The key takeaway: near-term improvement does not erase the broader reset from pandemic-era pricing. In some markets- primary markets for the most part- rental rates increased 7% month over month during the pandemic. That meteoric increase in rates was never going to be sustainable no matter the inflationary conditions. Buyers that bought based on those financials are now in the midst of a rude awakening as interest rates maintain elevated levels and expenses continue to rise. Investors should model modest growth, monitor concessions, and understand whether a market is improving because demand is returning or because operators finally stopped cutting rates.

Why is 90 percent occupancy not always the right assumption?

If every deal you see assumes 90 percent-plus occupancy, pause.

The state-level and non-REIT data tell a more nuanced story. Most states report occupancy between 80 percent and 90 percent, with a total weighted average of 88.3 percent. Storable’s 25,000-plus facility dataset averaged 81.8 percent over the last year. That does not mean a strong facility cannot run above 90 percent. It means buyers should not blindly assume 90 percent in every market. Stabilized occupancy depends on supply, population growth, competition, pricing discipline, management quality, and seasonality. When a facility is bought or sold, the occupancy usually takes a hit. Many of our underwrites don’t anticipate an increase in economic occupancy until after the first year because we acknowledge a stabilization phase. Some tenants will get annoyed by the transition to new management and new policies. Delinquent units may be auctioned off rather than provide phantom occupancy figures. In today’s environment, disciplined buyers underwrite a range of occupancy outcomes, not a single optimistic number.

Can discounting hide weak demand?

A facility can look full and still be buying occupancy with discounts.

Discounting is one of the easiest ways to misunderstand performance. The 2026 Self Storage Almanac shows discounting around 20 percent in 2019, rising to roughly 35 percent during the pandemic peak, dropping below 15 percent in 2021, and remaining elevated at 17.7 percent in Q2 2025. When discounts are high, the advertised rent may not reflect the real economic rent. For sellers, discount discipline can improve buyer confidence. For buyers, discounts are a diligence item: how many tenants are on promos, how long do concessions last, and what happens when those tenants roll to standard rates?

What does normal occupancy really look like?

A lot of people still underwrite self storage like it is 2021. That is dangerous.

REIT weighted occupancy peaked at 96.6 percent in Q2 2021, while non-REIT occupancy peaked at 90.0 percent. By Q4 2024, occupancy had bottomed at 90.4 percent for REITs and 80.9 percent for non-REITs. The lesson is not that storage is broken. The lesson is that pandemic-era occupancy was not normal. If a seller presents peak occupancy as stabilized performance, buyers should normalize the numbers. A good underwriting model should account for seasonality, local supply, concessions, and the difference between physical and economic occupancy. While delinquent units present an opportunity for accounts receivable, they should not be counted as normal physical occupancy. We consider any unit greater than 60+ days as a vacant unit because they are less likely to come current, and a properly followed lien and auction process will result in an empty unit within 60 days usually. 

Why do construction starts matter more than headlines?

A market can look healthy today and still become risky if too much new space is already in motion.

In markets tracked by Matrix for at least 24 months, the under-construction pipeline declined 6.2 percent quarter over quarter to 49.79 million net rentable square feet and 17.3 percent year over year. That decline is encouraging, but it does not eliminate risk. Most of that inventory still needs to be delivered and absorbed. Construction starts also remain a leading indicator. If starts fall, future competitive pressure may ease. If starts rebound because rates grow and capital or construction gets cheaper, supply risk can return. For investors, the underwriting lesson is clear: do not evaluate occupancy and rent today without also evaluating what is scheduled to open tomorrow. Unless a municipality has barriers in place- such as a moratorium- an errant developer can throw a wrench into an entire market. We try to leave “meat on the bone” when looking at a market. If the equilibrium supply index for a market is 7- meaning 7 net rentable square feet per capita results in an average occupancy of 85%- we try to have the supply index come in at less than the equilibrium AFTER our development is accounted for. We’d like to see room for another 1 or 2 self storage facilities before the equilibrium supply index is hit so that we have a protective buffer to our lease up or stabilized occupancy. If we reach stabilized occupancy and there are no new developments to erode the buffer, then expansion can be considered.