Cushman & Wakefield Releases 2024 Self-Storage Market Trends and Investor Survey Report

Real estate firm Cushman & Wakefield (C&W) has released its annual “U.S. Self Storage Market Trends & Investor Survey” report. The publication shows transaction volumes totaling nearly $3.3 billion during the first half of 2024, which is slightly above the total volume reported for the same period last year, according to a press release.

Per the report, the rising-interest-rate environment has pushed up capitalization (cap) rates for all types of commercial real estate. In the self-storage industry, cap rates have increased by 90 basis points from the fourth quarter of 2022 to 5.9% in the second quarter of 2024. Property-market fundamentals were also challenged during this period, with the Midwest and Southwest regions experiencing the greatest levels of decline in rent per available square foot at -11.2% and -10.1%, res“The Federal Reserve’s actions to taper inflation by increasing interest rates—along with the resulting decline in home sales combined with an influx of new storage supply—have been the primary contributors to self-storage occupancy levels dropping and market-stabilization levels settling around 90% in the fourth quarter of 2022. Despite some upward movement, occupancy levels broadly remained at this mark through the first half of 2024,” said C&W Managing Director Tim Garey.

Asking self-storage rents began to taper in the second half of 2023, down 5.2% year-over-year (YoY) at $127 per square foot (PSF) as net demand softened and new supply was introduced. In the first quarter of 2024, rates declined further to $120 PSF, down another 4.5% YoY, the report shows.

Like occupancy, asking rents have appeared to stabilize, with upward movement in the second quarter of 2024, to $121 PSF. Existing-customer rate increases have provided a balance to the softening asking rents. As a result, in-place rental rates have remained stable, according to the report.

“The elevated construction costs and lack of construction-debt liquidity have pushed construction levels downward to more normalized levels,” said Mike Mele, executive vice chairman and head of C&W’s Self Storage Advisory Group. “We have seen reports of a significant increase in the number of projects put on hold in the second quarter of 2024, signaling construction may remain at more moderate levels for the foreseeable future.”

Of more than 50 self-storage experts who participated in the investor survey, 56% expect to see little to no change in cap rates over the next 12 months, with the interest-rate environment being the top concern by 37% of the survey respondents, followed by the housing market.

“Bright spots in uncertainty surrounding broader capital markets environment remains top of mind for market participants. Of the survey participants, 71% plan to hold their properties through [the second half of] 2025, while 29% are net buyers signaling some market dislocation between buyers and sellers is still occurring,” said Luke Elliott, vice chair for C&W. “Activity is up, with listings hitting the market [that are] expected to drive increased transaction activity in the second half of 2024 and into 2025 through increasing buyer engagement.”

Founded in 1917, C&W offers a range of services for all property types including consulting and appraisal, corporate services, debt and equity financing, investment banking, leasing, and sales and acquisitions. The company employs 52,000 people in approximately 400 offices and 60 countries. In 2023, the firm had revenue of $9.5 billion across core services of property, facilities and project management; leasing; capital markets; valuation and other services.