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Cap Rates Narrow in Storage Sector

BOSTON—The current spread over the 10-year Treasury compares well with the 15-year average for the sector, says Chris Sonne, national self storage group valuation leader at CBRE.

R. Christian Sonne of CBRE Sonne says self-storage cap rates are likely to keep on compressing.

BOSTON—Cap rates in the self-storage space continue to compress as spreads widen compared to 10-year Treasuries, according to a Self Storage Investor Survey released by CBRE’s Valuation & Advisory Services. The survey comes a few days after Marcus & Millichap forecast increasing consumer demand for self-storage facilities, despite an accelerated pace of new construction.

Spreads rose at midyear to 395 basis points over the 10-year, an increase of nearly 14% over the end of 2015. This compares well with the 15-year average spread of 406 bps for the sector, according to Chris Sonne, EVP and national self storage valuation group leader at CBRE Valuation & Advisory Services.

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Paul Bubny

Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.

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