What Institutional Buyers Actually Look For in a Self Storage Facility

Key Takeaways

Institutional buyers — REITs, PE funds, and family offices — evaluate facilities on a specific checklist that most sellers don’t know exists.

Unit mix matters more than total square footage. Buyers want a balanced mix with a strong climate-controlled component (ideally 40%+ of NRSF).

Physical occupancy above 85% is the minimum threshold for most institutional buyers. Below that, you’re in “value-add” territory — which changes who’s interested and what they’ll pay.

Market demographics, management history, and expansion potential can add (or subtract) hundreds of thousands from your sale price.

Environmental red flags and outdated technology systems are increasingly common deal-killers in 2026.

Preparing for what institutional buyers want — before you go to market — is the single highest-ROI activity a seller can undertake.

Most self storage owners know their facility is valuable. What they don’t know is exactly how an institutional buyer evaluates it.

This isn’t a knock on owners. You’ve spent years — maybe decades — building and running a profitable business. You know your tenants, your market, your P&L inside and out. But when a private equity acquisition team or a REIT’s VP of investments sits down to underwrite your facility, they’re running a playbook that most sellers have never seen.

We work with these buyers every day. Our brokers have sat across the table from PE groups deploying $50 million in committed capital who need to park it in storage assets within 18 months. We’ve walked REIT acquisition directors through facilities that they ultimately paid $6 million for — and facilities they walked away from in 20 minutes.

The difference between those outcomes almost always comes down to the same set of criteria. Here’s what institutional buyers actually look for — and how your facility stacks up.

Unit Mix: It’s Not Just About Square Footage

Total net rentable square footage (NRSF) matters, but it’s not the first thing an institutional buyer analyzes. Unit mix is.

Why Unit Mix Matters

A facility with 50,000 NRSF could be 500 units of 100-square-foot storage, or it could be 100 units of 500-square-foot storage. These are fundamentally different businesses with different revenue profiles, different customer bases, and different risk characteristics.

Institutional buyers prefer a diversified unit mix that serves the broadest possible customer base. Here’s what they’re looking for:

The ideal unit mix breakdown (approximate):

Unit Size	Percentage of Total Units	Why
5×5 (25 SF)	8–12%	High demand, high revenue per square foot, low vacancy risk
5×10 (50 SF)	20–25%	The workhorse — highest demand size nationally
10×10 (100 SF)	25–30%	Strong demand from residential and small business
10×15 (150 SF)	12–18%	Solid mid-range, attracts longer-term tenants
10×20 (200 SF)	10–15%	Larger residential and business users
10×30+ (300+ SF)	5–10%	Commercial users, vehicle storage supplement

No buyer expects your mix to match this perfectly. But large deviations raise questions. A facility that’s 60% 10×20 and larger units has concentrated revenue in fewer tenants and is harder to fill. A facility that’s 80% 5×5 and 5×10 may have high turnover and limited revenue per unit.

The Climate-Controlled Premium

This is non-negotiable for most institutional buyers in 2026. Climate-controlled units command 25–40% rent premiums over standard drive-up units, and they’re increasingly what customers expect.

What institutional buyers want to see:

40%+ of NRSF in climate-controlled units for a Class A designation
25–40% climate-controlled is acceptable for Class B
Below 25% climate-controlled significantly narrows your buyer pool to value-add investors or operators who see a conversion opportunity

The data backs this up: climate-controlled units saw +0.9% year-over-year rent growth nationally in late 2025, while non-climate-controlled units were still slightly negative at -0.1%. Buyers are paying attention to that divergence.

Real example: We’ve seen two facilities in the same submarket — both 45,000 NRSF, both 88% occupied. The one with 50% climate-controlled product traded at a 5.5% cap rate. The all-drive-up facility traded at a 6.75% cap rate. On $250K of NOI, that’s a $545,000 difference in value. Same market. Same size. Different unit mix.

What About Boat/RV and Vehicle Storage?

Covered and enclosed vehicle storage is increasingly attractive to institutional buyers — especially in recreation-heavy markets. The February 2026 Uplift Development Group acquisition in Colorado specifically highlighted enclosed boat/RV and ski locker storage as a premium play.

However, outdoor uncovered vehicle parking is viewed as low-value NRSF. It fills land but doesn’t generate the revenue per square foot that enclosed units do. If more than 15–20% of your revenue comes from outdoor vehicle parking, institutional buyers will typically value that income stream at a wider cap rate than the enclosed storage.

Occupancy: The Magic Numbers

Institutional buyers look at occupancy differently than most owners expect.

The 85% Threshold

For most institutional buyers, 85% physical occupancy is the floor for a “stabilized” acquisition. Below 85%, the facility is categorized as a value-add or lease-up deal, which means:

Different buyer pool (more PE, fewer REITs)
Lower pricing (wider cap rates to compensate for occupancy risk)
More scrutiny on why occupancy is low

National occupancy averages paint a clear picture of the current landscape: REIT-managed facilities average 92.1% occupancy, while non-REIT sophisticated operators (15+ facilities) average 82.1%. That 10-percentage-point gap is entirely about operational sophistication — revenue management systems, digital marketing, and dynamic pricing.

If your facility runs at 88–93%, you’re in strong institutional territory. If you’re at 80–85%, you need a clear story about why occupancy is below average and what a new operator can do to improve it.

The Occupancy Trend Matters More Than the Snapshot

A facility at 87% occupancy and trending up tells a very different story than a facility at 87% occupancy and trending down. Institutional buyers will ask for monthly occupancy data going back 24–36 months. They’re looking for:

Seasonal patterns — normal and expected
Trend direction — improving or declining?
Volatility — steady performance or wild swings?
Comparison to market — are you outperforming or underperforming your local competitive set?

Economic Occupancy vs. Physical Occupancy

Sophisticated buyers calculate both:

Physical occupancy: Units rented ÷ Total units
Economic occupancy: Actual collected revenue ÷ Potential gross revenue at full occupancy and market rates

If your physical occupancy is 90% but your economic occupancy is 78% because you have a lot of below-market legacy tenants or uncollected rent, a buyer will focus on the economic number. They’ll still see the opportunity to push rates — but they’ll price the deal on economic occupancy, not physical.

Market Demographics: Location Is a Thesis

Institutional buyers don’t just buy facilities. They buy markets. Your facility could be perfectly operated, but if it’s in a market that doesn’t fit an institutional thesis, you won’t get institutional pricing.

What Makes a Market Attractive

Population growth. This is table stakes. Institutional buyers want markets growing at 1%+ annually. They’ll pull 5-year population projections from Esri, CBRE, or CoStar and overlay them with your 3- and 5-mile trade area demographics.

Household income. Self storage demand correlates strongly with household income in the $40,000–$100,000 range. Too low, and people can’t afford storage. Too high, and they have enough space at home. The sweet spot for institutional buyers is a median household income of $50,000–$85,000 within a 3-mile radius.

Housing density and type. Apartment-heavy markets drive stronger storage demand per capita. Buyers look at multifamily density within your trade area — a 3-mile radius with 40%+ renter-occupied housing is a strong indicator.

Limited new supply. This is increasingly critical. In early 2026, markets like Sarasota-Cape Coral (8.7% of existing inventory under construction), Phoenix (6.6%), and Tampa (6.6%) are oversupplied. Institutional buyers are cautious about these markets. Meanwhile, supply-constrained markets like NYC, Washington D.C., and Boston are seeing premium pricing.

A useful rule of thumb: If your market has more than 5% of existing self storage inventory under construction, institutional buyers will discount their pricing. Below 3%, they’ll pay a premium.

Per-capita storage saturation. The national average is about 6.3 square feet of storage per person. Markets well above that face saturation risk. Markets below — like the Los Angeles MSA at just 5 SF per capita — have room for growth and attract institutional interest.

Market Red Flags

Population decline or stagnation
Military-dependent economy (base closure risk)
Single-employer dependency (factory towns)
More than 5% of existing storage inventory under construction
Per-capita storage above 10 SF in a slow-growth market
Zoning that permits unlimited new storage development

Market Green Flags

Top-100 MSA or strong secondary market
Population growth above 1.5% annually
Diverse employment base
Limited new supply pipeline
Per-capita storage below 7 SF
Zoning restrictions that limit new self storage development (increasingly common — Atlanta, Chicago, and other cities have recently enacted storage construction bans in certain zones)

Management History: Tell Me a Story

Institutional buyers aren’t just buying real estate. They’re buying a business — and they want to understand how that business has been run.

What They Want to See

Consistent, professional management. Whether you self-manage or use a third-party management company, buyers want to see evidence of systematic operations: regular rate increases, documented maintenance schedules, professional tenant communications, and consistent policies.

Revenue management track record. Do you implement existing customer rate increases (ECRIs)? How often? What’s your cadence? Institutional operators typically raise existing customer rates every 9–12 months once a tenant has been in place for 6+ months. If you’ve never raised rates on long-term tenants, a buyer sees both a risk (rate shock when they implement increases) and an opportunity (below-market rents they can capture).

Clean, auditable financials. This cannot be overstated. Institutional buyers will have their acquisition team, their accountant, and potentially their lender’s analyst reviewing your financials. If your P&L is a mess of commingled personal expenses, cash transactions, and handwritten ledgers, you’ve immediately eroded buyer confidence.

What “clean financials” means specifically:

Separate bank accounts for the facility
No personal expenses running through the business
Revenue reconciled between management software and bank deposits
Expenses categorized consistently month over month
Trailing 12-month (T-12) financials that match tax returns

Stable staffing. High manager turnover is a yellow flag. Buyers interpret frequent staffing changes as either a management problem or a compensation problem — both of which they’ll have to fix.

The Add-Back Question

Every seller has add-backs — expenses that are personal to the owner and won’t continue under new ownership. Common examples: the owner’s salary above market rate, a family member on payroll who doesn’t work full-time, personal vehicle expenses, or one-time capital expenditures.

Institutional buyers are skeptical of add-backs. They’ll accept clearly documented, reasonable adjustments. But if your add-backs represent 20%+ of total expenses, expect pushback. The more add-backs you claim, the less the buyer trusts your reported NOI.

Our rule of thumb: If you can’t document it with a receipt and a clear explanation of why it won’t recur under new ownership, don’t claim it as an add-back. Overclaiming add-backs doesn’t increase your sale price — it increases the buyer’s skepticism.

Expansion Potential: The Upside That Sells Itself

After income quality and market fundamentals, expansion potential is the single most valuable attribute a facility can have for institutional buyers.

Why Expansion Is So Valuable

Institutional buyers — especially PE firms — don’t just underwrite your current income. They underwrite the total value creation over their hold period. If they can acquire your 40,000 NRSF facility at a 6% cap rate and add 15,000 NRSF of new construction, they’ve created substantial value at development-level returns (typically 8–10%+ yield on cost) while paying market price for the existing asset.

What Buyers Look For

Excess land. Vacant, developable land adjacent to or part of the existing property is the most straightforward expansion opportunity. Ideally, the land should be:

Zoned (or easily re-zoned) for self storage use
Free of environmental contamination
Graded or easily developable
Large enough to support meaningful additional NRSF (10,000+ SF)

Vertical expansion potential. In higher-cost markets, multi-story construction is increasingly common. If your single-story facility sits on a parcel that could support a 3- or 4-story building, buyers will underwrite that potential.

Conversion opportunities. Can underperforming outdoor parking areas be converted to enclosed storage? Can drive-up units be enclosed and climate-controlled? These lower-cost expansions are attractive because they improve revenue per square foot without the cost of ground-up construction.

Entitled vs. unentitled. If you’ve already obtained site plan approval, building permits, or zoning approvals for an expansion, that’s significantly more valuable than raw land where the entitlement outcome is uncertain. In markets where cities are restricting new self storage (like Atlanta’s Beltline zone ban or Chicago’s industrial zone restrictions), having existing entitlements is an increasingly rare and valuable asset.

Quantifying the Value

Here’s a simplified example of how expansion potential affects pricing:

Existing facility: 45,000 NRSF, $270,000 NOI, valued at a 6.0% cap rate = $4,500,000

Expansion potential: 15,000 NRSF of entitled land, estimated construction cost of $55/SF ($825,000), projected stabilized NOI contribution of $90,000

Value of expansion at 6% cap = $1,500,000. Even after netting the $825K construction cost, that’s $675K in value creation. A buyer might pay an additional $200K–$400K above the existing facility’s value to capture that upside.

Some buyers will pay more aggressively for expansion potential than others. PE firms chasing IRR targets value it highly. REITs that need stabilized cash flow may value it less. Understanding your buyer pool helps you position expansion potential correctly.

Environmental Concerns: The Silent Deal-Killer

Environmental issues don’t come up in every deal. But when they do, they can crater a transaction faster than anything else.

Phase I Environmental Site Assessment

Virtually every institutional buyer will require a Phase I Environmental Site Assessment (ESA) as part of due diligence. A Phase I is a records review and site inspection (no soil sampling) designed to identify “recognized environmental conditions” (RECs) — things like:

Historical use of the property as a gas station, dry cleaner, or industrial site
Underground storage tanks (USTs) — current or historical
Evidence of soil contamination, staining, or dumping
Proximity to known contaminated sites (Superfund, brownfield, state cleanup lists)
Asbestos-containing materials or lead paint in older structures

What Triggers a Phase II

If the Phase I identifies any RECs, the buyer will typically require a Phase II ESA, which involves actual soil and/or groundwater sampling. Phase II assessments cost $10,000–$50,000+ and take 4–8 weeks to complete. More importantly, they can delay or kill a deal.

Common Phase I findings in self storage:

Underground storage tanks from prior site uses (especially if the property was previously a gas station or auto repair shop). This is the most common environmental red flag in self storage transactions.
Adjacent contamination from neighboring properties (gas stations, dry cleaners, industrial sites) that may have migrated onto your property.
Asbestos in older buildings. Facilities built before 1980 may contain asbestos in roof shingles, siding, floor tiles, or pipe insulation.
Fill material of unknown origin. If the site was graded with fill dirt from an unknown source, that can trigger concerns.

How to Prepare

If you know your property has a clean environmental history, get a current Phase I done before going to market. A clean Phase I in hand removes one of the biggest sources of due diligence delay and demonstrates proactive transparency.

If you suspect environmental issues, address them now. Remediation before marketing is almost always cheaper and less disruptive than dealing with it during a live transaction when a buyer has leverage to demand concessions.

Cost of a Phase I ESA: $2,000–$5,000 for a standard assessment. A small investment that can prevent a much larger problem.

Technology and Access Systems: The New Baseline

Five years ago, a keypad gate and a basic security camera system was sufficient for most institutional buyers. In 2026, the bar has moved significantly higher.

What Institutional Buyers Expect

Cloud-based management software. SiteLink, Hummingbird (by Storable), storEDGE, or similar platforms that provide real-time reporting, online rental capabilities, and integration with revenue management tools. If you’re managing your facility with spreadsheets or outdated on-premise software, you’ll need to explain the transition cost to a buyer — and they’ll price it in.

Online rental and payment capabilities. The pandemic permanently shifted customer expectations. Public Storage reports that 85%+ of their customers now use self-service digital tools. Buyers expect your facility to offer online reservations, online bill pay, and ideally a fully digital move-in experience.

Smart access systems. Smart locks (Nokē, Janus, or similar) are increasingly expected at Class A and Class B facilities. They provide:

Unit-level access control and monitoring
Elimination of traditional lock cuts for overlocked units
Data on unit access patterns (useful for revenue management)
Ability to grant and revoke access remotely

Operators report positive ROI within 12–18 months of smart lock installation, and many charge a technology fee ($5–$15/unit/month) or achieve 5–10% rate premiums on smart-lock-enabled units.

Security cameras with remote monitoring. Multi-camera systems with cloud storage and remote access are standard. Buyers want to see full coverage of all drive aisles, entry/exit points, and elevator lobbies.

Automated kiosks. For unstaffed or lightly staffed facilities, self-service rental kiosks are becoming common. The trend toward unmanned operations — accelerated by rising labor costs — makes facilities with automation infrastructure more attractive.

The Technology Gap

Here’s an uncomfortable reality: 78% of operators surveyed by Storable in early 2026 plan to enhance customer experience through automation and smart systems. If you’re in the 22% that isn’t investing in technology, your facility is falling behind the competitive baseline.

Institutional buyers factor technology upgrades into their acquisition underwriting. The cost to bring a facility up to current standards (smart locks, camera upgrades, management software migration, online rental integration) typically runs $50,000–$150,000 depending on facility size and current systems. That cost comes directly off the price a buyer is willing to pay.

The Physical Property: What They Notice on the Walk-Through

When an acquisition director walks your property, here’s what they’re evaluating — often within the first 15 minutes:

Curb Appeal and First Impressions

Signage: Visible from the road? Illuminated? Modern design or a faded 1990s sign?
Landscaping: Maintained or overgrown?
Entry gate: Functional, modern, and well-maintained?
Office/retail area: Clean, professional, and inviting — or a cluttered afterthought?
Drive aisles: Clean, well-paved, well-lit?

Structural and Mechanical Systems

Roof condition: Single-ply membrane roofs on climate-controlled buildings have a 15–25-year lifespan. If your roof is nearing end-of-life, buyers will price in a replacement ($4–$8/SF).
HVAC systems: For climate-controlled buildings, the age and condition of HVAC units is a critical cost item. Units older than 12–15 years will need replacement during the buyer’s hold period.
Paving: Cracked, potholed parking areas signal deferred maintenance. Resurfacing costs $2–$5/SF.
Roll-up doors: Are they functional? Modern? Insulated? Doors in poor condition are an immediate visual red flag.
Drainage: Proper grading and drainage around buildings is essential. Water intrusion is one of the most common and costly problems in self storage.

What Gets Flagged

Based on our experience, here are the physical conditions that most frequently lead to price adjustments or deal concerns during institutional buyer walk-throughs:

Roof issues — leaks, ponding water, visible deterioration
Paving deterioration — potholes, cracking, drainage issues
Security system deficiencies — broken cameras, outdated access controls, poor lighting
HVAC age — units past useful life, inadequate capacity
ADA compliance — lack of accessible units, non-compliant office/restroom
Fire suppression — missing or non-functional sprinkler systems where required
Pest evidence — rodent droppings, insect damage in units

The Institutional Buyer’s Checklist: A Summary

Here’s the consolidated checklist that institutional buyers work through when evaluating your facility. Use it to self-assess before going to market:

Financial Health

Trailing 12-month NOI above $250,000 (minimum for most institutional interest)
Expense ratio below 40% (ideally 30–35%)
Consistent revenue growth or stability over 24+ months
Clean, auditable financials with minimal add-backs
Revenue management system in place with regular rate increases

Occupancy & Revenue

Physical occupancy above 85% (ideally 88%+)
Economic occupancy within 5% of physical occupancy
Positive occupancy trend over trailing 12 months
Street rates competitive with or above local market

Unit Mix & Physical Plant

Diversified unit mix serving residential and commercial customers
Climate-controlled component of 25%+ (ideally 40%+)
Total NRSF of 35,000+ (ideally 45,000+)
Well-maintained with no major deferred capital needs
Roof, HVAC, and paving in good condition

Market Position

Located in a top-100 MSA or strong secondary market
Trade area population growing at 1%+
Median household income of $50K–$85K within 3-mile radius
New supply pipeline below 5% of existing inventory
Defensible competitive position (visibility, access, signage)

Technology & Operations

Cloud-based management software
Online rental and payment capabilities
Modern security cameras with cloud storage
Smart locks or electronic access control
Professional website with online booking

Environmental & Regulatory

Clean Phase I Environmental Site Assessment (or no known issues)
Clear title with no encumbrances
Proper zoning for current use
ADA compliance
Fire code compliance

Expansion Potential

Excess developable land available
Zoning permits additional construction
Expansion entitlements in place or obtainable
Conversion opportunities (drive-up to climate-controlled, outdoor to enclosed)

What You Can Do Before Going to Market

You can’t change your market demographics or add 15,000 square feet overnight. But here’s what you can control — and what will directly impact how institutional buyers evaluate and price your facility:

Clean up your financials. Separate personal from business expenses. Reconcile your management software with bank statements. Prepare a clean T-12 that will withstand institutional scrutiny.

Implement revenue management. If you haven’t raised rates on long-term tenants in years, start a systematic ECRI program now. Even 6 months of documented rate increases changes the story for buyers.

Invest in curb appeal. Fresh paint on the office, new signage, clean landscaping, and repaved drive aisles are relatively inexpensive but dramatically affect buyer perception.

Get a Phase I done. A $3,000–$5,000 investment that removes a major due diligence risk and signals professionalism.

Upgrade your technology. If you’re not on a cloud-based management platform with online rental capabilities, the cost to upgrade ($5,000–$15,000) will pay for itself many times over in the sale price.

Address deferred maintenance. That leaking roof section, the HVAC unit that’s been limping along, the potholed parking area — fix them now. Every dollar you spend on maintenance before marketing saves you $2–$3 in buyer-demanded price reductions during due diligence.

Document everything. Capital improvements, maintenance records, rate increase history, occupancy trends — organized documentation builds buyer confidence and reduces due diligence friction.

The Bottom Line

Institutional buyers aren’t mysterious. They’re methodical. They have checklists, return targets, and investment theses — and they evaluate every facility against those criteria with discipline and precision.

The owners who get the highest prices aren’t necessarily the ones with the biggest or newest facilities. They’re the ones who understand what buyers want and prepare accordingly. By the time an institutional buyer walks your property, the story should already be clear: this is a well-run, well-maintained, well-positioned asset in a strong market with room to grow.

That’s the facility that gets multiple offers, aggressive pricing, and a smooth path to closing.

Wondering how your facility scores on the institutional buyer checklist? We’ll walk through it with you — confidentially, no obligation.

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