The self-storage sector in the first half of 2025 is experiencing lower transaction volume, valuations, average rents and less new construction. However, the consensus view is that self-storage property fundamentals are strong, according to Cushman & Wakefield’s market trends & investor survey of the sector for the first half of 2025.
The volume of deals reached $2.85 billion in the period, barely above its level in 2023 before self-storage investment surged. Valuations also dipped. In addition, average rents fell from the all-time high of $134 per unit to $128 per unit.
On top of that, high costs, tariff concerns and limited construction debt liquidity have deterred new construction, with the result of a number of projects getting put on hold.
The volume of investment in the sector has normalized from earlier highs, largely spurred by institutional capital. The average price per square foot fell over 10 consecutive quarters to an average of $97 per square foot in Q2 2025, down 13% from its peak level of $112 in Q1 2022.
A majority of expert respondents to a Cushman & Wakefield survey see little change ahead in the next 12 months. For many, the biggest concerns were the slowing housing market that discourages investment in self-storage units, lower valuations and the future of interest rates.
However, the report found that investor interest remained high, even though from Q1 2023 to Q2 2025, the average quarterly change in transaction volume was down 6.0%. It noted that investors, especially some regional and institutional groups, continue to seek value-add opportunities in both primary and secondary markets.
“Investor appetite has seen a shift to ‘Class B’ investments and secondary markets as heightened interest rates increase the cost of debt, making higher-priced Class A properties more difficult to attain and encouraging well-positioned owners and operators to hold their investments,” the report stated.
With no movement on interest rates to date, self-storage capitalization rates have remained at stable levels, averaging 5.8% over the past six quarters. For stabilized Class A properties, cap rates remain in the 5% to 5.50% range, and Class B in the 5.50% to 6.50% range, and are expected to remain stable.
“Self-storage investors still feel fundamentals are strong and the market has upside in all primary and secondary markets,” the report commented.
Cushman & Wakefield also showed that average occupancy rates nationwide have essentially remained flat between 89% and 92% since the beginning of 2024. In some areas, though, occupancy rates have been affected by a slump in home sales and an influx of new storage supply. Physical occupancy declined in the Pacific and part of the Midwest but remained flat in other regions.
Average rents were highest in the East ($154 per unit/$1.12 per square foot in the Northeast) and ($193 per unit/$1.46 per square foot in the Pacific) and lowest in the Midwest (81 cents per square foot) and South (95 cents per square foot). In the Southeast, prices plummeted 16.7% over the year. Existing Customer Rate Increases (ECRI) helped balance softening asking rents, which often remained steady or even increased for some properties.
In each region, concessions were offered. The greatest extremes were in the Midwest. They ranged from a median increase of 96.1% in the western section to a low of 39.7% in the eastern part. The effective cost of the concessions varied from 9.5% to 7.8% nationwide.
The top 10 metros for self-storage economic occupancy growth were Minneapolis, Jacksonville, Chicago, Kansas City, Hartford, Las Vegas, Buffalo, Denver, Detroit and Tampa.
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