The holidays are upon us and cautious optimism is certainly present in today’s self-storage investment market. Recent market volatility has pushed the Ten-Year Treasury back down below 3% and lenders, buyers, and owners are still bullish on self-storage assets. This, along with recent operating performance has breathed new life in to the already historically long self-storage run.
After exhibiting an incredible pace of growth over the last several years, the self-storage industry is showing signs of slowing to a more sustainable pace in 2019. Cap rates and values in most markets are expected to be flat and not compressing further, however we are also not anticipating any rise in cap rates as there is still meaningful demand and bidding competition from qualified investors. This late cycle expansion has continued to allow late movers to capitalize on a very fluid transaction and financing market. However, some sellers that hold out for the final dollar will be left wondering what happened when the investment market officially turns downward. Remember, it is better to be a year too early than a day too late!