Self Storage Cap Rates in 2026: Complete Guide by Market and Class

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Key Takeaways

• A cap rate is the annual return a buyer expects on their investment. Lower cap rate = higher property value.
• In 2026, self storage cap rates generally range from 4.5% to 7.5%+, depending on property class, market tier, and buyer type.
• Class A facilities in primary markets trade at the tightest caps (4.5–5.5%), while Class C facilities in tertiary markets trade at the widest (6.5–7.5%+).
• Cap rates have expanded modestly from the historic lows of 2021–2022, but remain compressed compared to pre-pandemic norms.
• Institutional buyers (REITs, PE funds) consistently pay lower cap rates than private buyers because of their lower cost of capital and longer hold horizons.
• A half-point difference in cap rate can swing your sale price by hundreds of thousands of dollars — understanding where your facility falls is critical to pricing.

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If you own a self storage facility, the cap rate that buyers apply to your property is one of the single most important numbers in determining what you walk away with at closing. A cap rate that’s a half-point too high can cost you $300,000 or more on a mid-size facility. A half-point too low, and you’re leaving money on the table by pricing too aggressively and scaring off buyers.

We’re the team behind The Storage Brief. In this guide, we’ll explain exactly what cap rates are, what they look like across different self storage markets and property classes in 2026, and what it all means for the value of your facility.

What Is a Cap Rate? (The Simple Explanation)

A capitalization rate — “cap rate” — is the ratio of a property’s net operating income (NOI) to its value. It tells you the annual return an investor would earn if they bought the property with all cash.

Cap Rate = NOI ÷ Property Value

Or, flipped around (which is how it’s used for valuation):

Property Value = NOI ÷ Cap Rate

Here’s why this matters to you as a seller. If your facility generates $200,000 in NOI:

Cap Rate	Implied Value
5.0%	$4,000,000
5.5%	$3,636,364
6.0%	$3,333,333
6.5%	$3,076,923
7.0%	$2,857,143
7.5%	$2,666,667

Same income. The only thing that changed is the cap rate — and the value swung by $1.33 million from top to bottom.

That’s the power of the cap rate. It’s not just a financial metric; it’s the market’s judgment of your property’s quality, risk, and growth potential.

Cap Rate Ranges by Property Class (2026)

Not all self storage facilities are created equal, and the market prices them accordingly. Here’s how cap rates break down by property class in the current market.

Class A Facilities: 4.5% – 5.5%

Class A self storage facilities are the best of the best. These are the properties that institutional buyers — REITs like Public Storage and Extra Space, as well as large private equity funds — compete aggressively to acquire.

What makes a facility Class A:

• Newer construction (built within the last 10–15 years)
• Significant climate-controlled component (50%+ of NRSF)
• Located in primary or strong secondary metro markets with growing populations
• High occupancy (90%+ stabilized)
• Modern technology — smart locks, online rentals, dynamic pricing, professional management
• Excellent visibility and access — major road frontage, easy ingress/egress
• Strong curb appeal — clean, modern design, well-maintained

At 4.5–5.5% cap rates, a Class A facility generating $300K in NOI would trade between $5.45M and $6.67M.

Class B Facilities: 5.5% – 6.5%

The majority of self storage facilities in the U.S. fall into the Class B category. These are solid, functional, income-producing assets that may lack some of the polish of Class A but generate reliable cash flow.

What makes a facility Class B:

• 10–25 years old, well-maintained but showing some age
• Mix of drive-up and climate-controlled units (climate-controlled may be 20–50% of NRSF)
• Located in suburban or secondary markets with stable or growing populations
• Good occupancy (82–92% stabilized)
• Functional technology — may not have the latest systems but operations are solid
• Decent visibility — may not be on a main arterial but has adequate signage and access
• Well-maintained but may need cosmetic updates or minor capital improvements

At 5.5–6.5% cap rates, a Class B facility generating $200K in NOI would trade between $3.08M and $3.64M.

Class C Facilities: 6.5% – 7.5%+

Class C facilities are older, more basic properties that may be in smaller markets or less desirable locations. They still produce income, but buyers see more risk and less growth potential, so they demand a higher return.

What makes a facility Class C:

• 25+ years old, may have deferred maintenance
• Predominantly or exclusively drive-up — little or no climate-controlled product
• Located in tertiary or rural markets with flat or declining populations
• Lower occupancy (70–85%) or inconsistent occupancy history
• Minimal technology — manual operations, limited online presence
• Limited visibility or access — off main roads, difficult to find
• Deferred maintenance — aging roofs, pavement issues, outdated security

At 6.5–7.5% cap rates, a Class C facility generating $150K in NOI would trade between $2.0M and $2.31M.

Some Class C properties — particularly those in very small markets, with significant deferred maintenance, or with operational challenges — may trade above 7.5% or even 8%+ cap rates.

Cap Rate Ranges by Market Tier

Beyond property class, the market where your facility sits has an enormous impact on the applicable cap rate. Buyers categorize markets into tiers, and each tier carries different risk and return expectations.

The Master Cap Rate Table

This table combines property class and market tier to give you a comprehensive view of where cap rates fall in 2026:

	Primary Markets	Secondary Markets	Tertiary Markets
Class A	4.5% – 5.0%	5.0% – 5.5%	5.5% – 6.0%
Class B	5.5% – 6.0%	6.0% – 6.5%	6.5% – 7.0%
Class C	6.5% – 7.0%	7.0% – 7.5%	7.5% – 8.5%+

Primary Markets (lowest cap rates, highest values): Major metros with deep institutional buyer pools. Think Dallas-Fort Worth, Atlanta, Phoenix, Charlotte, Tampa, Raleigh, Nashville, Austin, Denver, and similar growth markets. High population density, strong job growth, significant barriers to new supply in many submarkets.

Secondary Markets (moderate cap rates): Smaller metros and strong regional markets. Think cities like Knoxville, Greenville SC, Boise, Tucson, Chattanooga, Savannah, or the outer suburbs of primary markets. Growing populations, increasing institutional interest, but less buyer competition than primary markets.

Tertiary Markets (highest cap rates): Small towns, rural areas, and markets with limited buyer pools. These are the places where mom-and-pop owners predominate and institutional capital rarely ventures. The buyer pool is smaller, the growth prospects are more uncertain, and the financing options are more limited.

Regional Variations to Be Aware Of

While cap rates are primarily driven by property class and market tier rather than state lines, there are regional patterns worth noting:

Sun Belt states (TX, FL, GA, NC, SC, TN, AZ) generally see tighter cap rates due to strong population growth, job creation, and institutional buyer appetite. A Class B facility in the suburbs of Charlotte or Tampa will trade at a lower cap rate than an identical facility in the Midwest or Northeast.

Midwest and Northeast markets often see slightly wider cap rates due to slower population growth, higher operating costs (heating, snow removal), and less institutional interest — though strong individual markets (Columbus, Indianapolis, parts of Pennsylvania) can buck this trend.

West Coast markets (CA, OR, WA) are a mixed bag. High barriers to entry support tight cap rates for existing facilities, but high operating costs, challenging regulatory environments, and property tax reassessment risk (especially in California) can push cap rates wider than you’d expect for the market size.

Cap Rate Trends: Where We’ve Been and Where We’re Headed

To understand 2026 cap rates, you need to understand the journey that got us here.

2019 (Pre-Pandemic Baseline)

Before COVID, self storage cap rates had been gradually compressing for years as institutional capital discovered the asset class. A typical stabilized Class B facility in a secondary market was trading at 6.5–7.5%. Class A institutional product was at 5.0–6.0%. These were considered solid returns, and the market was healthy.

2020–2021 (COVID Compression)

The pandemic was a rocket booster for self storage. People moved, downsized, needed extra space for home offices, and occupancy rates across the industry surged to record highs. Revenue skyrocketed as operators pushed rates aggressively. At the same time, interest rates were near zero, and institutional investors were pouring capital into self storage as a “recession-resistant” asset class.

Cap rates compressed sharply. Class A product in primary markets dropped to the low 4s and even the high 3s in some cases. Class B facilities that were trading at 7% cap rates in 2019 were suddenly at 5.5–6.0%. The entire curve shifted down by 100–200 basis points.

2022–2023 (The Rate Shock)

The Fed raised interest rates aggressively starting in 2022, and cap rates started to drift wider. Not dramatically — self storage held up better than most commercial real estate sectors — but the days of sub-4% cap rates for storage were over. At the same time, same-store revenue growth decelerated as the pandemic tailwinds faded and new supply started delivering.

Bid-ask spreads widened. Some sellers still wanted 2021 pricing; buyers were adjusting for higher borrowing costs. Transaction volume dropped.

2024–2025 (The New Normal Takes Shape)

By 2024 and into 2025, the market found its footing. Interest rates remained elevated compared to the zero-rate era, but the expectation of eventual rate cuts (and the partial delivery on that expectation) gave buyers enough confidence to transact. Cap rates settled into the ranges we outlined above — expanded from the 2021 lows but still compressed compared to pre-pandemic norms.

Institutional buyers returned in force, particularly for portfolios and Class A product. Private equity capital — much of it raised during 2020–2022 with dry powder that needed deployment — drove aggressive bidding on quality assets.

2026: Where We Are Now

In 2026, the self storage cap rate environment is characterized by:

• Stability at compressed levels. Cap rates aren’t compressing further, but they’re not expanding either. The market has reached an equilibrium that reflects current interest rates and risk premiums.
• Bifurcation by quality. The spread between Class A and Class C cap rates has widened. Top-quality product in strong markets commands very tight pricing; lower-quality product in weaker markets has seen less cap rate recovery.
• Strong institutional demand. REITs and PE funds remain active acquirers, which keeps cap rates tight for the assets they target.
• Pricing discipline. Buyers are more rigorous about underwriting than they were during the frenzy of 2021. They’re looking at actual income, not projections, and pricing accordingly.

What Drives Cap Rates Up or Down?

Understanding what moves cap rates helps you understand what’s likely to happen to your property’s value. Here are the primary drivers.

Factors That Compress Cap Rates (Increase Value)

Lower interest rates. When borrowing costs drop, buyers can pay more for a property and still hit their return targets. Lower rates also mean lower cap rates.

Strong demand from institutional buyers. When REITs, PE funds, and family offices are actively competing for self storage assets, cap rates get bid down.

Population and job growth in your market. Growing markets attract capital. That capital compresses cap rates.

Limited new supply. If your market has strong barriers to entry (zoning restrictions, high land costs, limited entitled sites), existing facilities become more valuable.

Proven, stable income. A facility with years of high occupancy and steady rent growth is a lower-risk investment. Lower risk = lower cap rate.

Value-add potential. Expansion land, below-market rents, or technology upgrades that a buyer can implement to boost NOI can tighten the effective cap rate because buyers are pricing in the upside.

Factors That Expand Cap Rates (Decrease Value)

Higher interest rates. The inverse of above. Higher borrowing costs mean buyers demand higher returns, pushing cap rates up.

New supply flooding your market. If three new facilities are under construction within your trade area, buyers will worry about occupancy pressure and price accordingly.

Declining occupancy or revenue. A facility with falling income is riskier, and buyers will demand a higher cap rate to compensate.

Deferred maintenance or functional issues. Properties that need capital investment trade at wider cap rates because the buyer needs to fund improvements.

Smaller buyer pool. In tertiary markets with fewer potential buyers, there’s less competition, which means wider cap rates.

Economic uncertainty. During recessions or periods of economic stress, risk premiums increase across all real estate, and cap rates widen.

Institutional vs. Private Buyer Cap Rate Expectations

One of the most important dynamics in self storage today is the difference in pricing between institutional and private buyers.

Institutional buyers (REITs, PE funds, family offices managing $100M+) typically buy at cap rates that are 50–150 basis points lower than what private buyers pay. There are several reasons:

• Lower cost of capital. A REIT can issue equity or unsecured debt at rates that private buyers can’t access. Their blended cost of capital might be 4–5%, while a private buyer is borrowing at 6–7%.
• Longer hold periods. Institutional buyers often plan 7-10+ year holds. They’re less focused on day-one cash-on-cash returns and more focused on long-term value creation.
• Portfolio premiums. Adding facilities to an existing platform reduces per-property overhead and creates synergies that justify tighter pricing.
• Mandate to deploy capital. PE funds have committed capital that must be invested within a defined period. This creates urgency that sometimes leads to aggressive pricing.

Private buyers (individual investors, small partnerships, local operators) typically need higher cap rates because:

• Higher borrowing costs. They’re using SBA loans, CMBS, bank debt, or bridge financing at higher rates.
• Higher risk tolerance requirements. Their personal capital is at risk, so they need a bigger cushion.
• Operational burden. They may be self-managing, so they need enough return to justify their time.

What this means for you as a seller: if your facility is the type and size that attracts institutional interest (generally $5M+ in value, in a growing market, with strong fundamentals), you may benefit from significantly tighter cap rate pricing. If your facility appeals primarily to private buyers, expect wider cap rates — but also know that the private buyer pool is large and active.

How to Think About Cap Rates When Selling Your Facility

Here’s our advice to owners who are trying to figure out what cap rate applies to their property:

1. Don’t anchor to what you’ve heard. A neighbor who sold at a 5% cap rate may have had a very different property in a very different market with a very different buyer. Their cap rate is not your cap rate.

2. Understand your position on the spectrum. Look at the class of your facility, the tier of your market, and the quality of your income stream. Be honest about where you fall.

3. Get the range, then focus on execution. The right pricing and marketing strategy, combined with a competitive bidding process, is how you end up at the favorable end of your applicable cap rate range. Going to market too high or too low both leave money on the table.

4. Consider who your buyer is likely to be. If you have a facility that will attract institutional interest, your pricing strategy should reflect that. If your buyer is more likely to be a private investor, price accordingly.

5. Don’t confuse the going-in cap rate with the total return. Some buyers will accept a lower going-in cap rate because they see opportunities to increase income (through rate increases, expense reduction, expansion, or operational improvements). Understanding the buyer’s total return model helps you position the sale.

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Not Sure What Cap Rate Applies to Your Facility?

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