Why Self-Storage Needs to Be on the Radar of Every Net Lease Investor

The perception of the self-storage industry has changed dramatically in the past 10 years as facilities have become more sophisticated, better built and more mainstream. As a direct result, self-storage has become one of the hottest product types within commercial real estate and values are at an all-time high. Short-term demand drivers boosted by the pandemic are contributing to the strong performance the sector has seen through mid-2021, and investor sentiment remains incredibly bullish. With asking rents on the rise and vacancy falling, or at least remaining stable for the foreseeable future, there is a favorable outlook for cap rates and property values going forward, and this asset class needs to be on the radar of every net lease investor.

While self-storage is becoming a more institutionalized class of commercial real estate, with several U.S.-based publicly traded REITs focused on self-storage, the majority of self-storage owners are still private. Private and institutional investor confidence has been growing as more and more people rely on self-storage facilities to fill a variety of short- and long-term needs, and REITs and institutional investors, along with larger private self-storage owners, are the most active right now. These groups are seeking nationwide assets throughout the sector, with Class A and B product, both climate-controlled and non, in high demand. Furthermore, demand is surging in warm climates as these areas benefit from employment growth, increasing populations and improving demographics.