Self-Storage REIT Update – February 2026

February 4, 2026

February 2026 Self-Storage REIT Update: Now Available

Why Execution Matters More Than Ever in Today’s Self-Storage Market

The self-storage sector has entered a more disciplined, and more demanding, phase of the cycle.

After several years of outsized growth, fundamentals have cooled over the past 12 to 24 months. Softer demand, elevated vacancy, and flattening rents are now shaping near-term performance across the public self-storage REIT universe. While new supply has slowed and occupancies have stabilized near long-term averages, pricing power remains elusive, and operating expenses continue to pressure margins.

Capright’s Self-Storage REIT Update – February 2026 examines how the sector is adjusting and where performance is still being created.

Cooling Fundamentals, Changing Assumptions

Through 3Q25, both rental rates and occupancy posted YoY declines. Operators have leaned heavily on concessions and discounted street rates to drive absorption, keeping effective rents compressed. While aggressive existing customer rent increases (ECRIs) have helped limit occupancy erosion, they’ve also contributed to slower rent growth and rising tenant churn in oversupplied markets.

These dynamics have reshaped underwriting assumptions. Investors are now modeling longer lease-up periods, slower economic stabilization, and wider exit cap rate spreads to account for sustained supply pressure. In today’s environment, conservative, data-driven underwriting is no longer optional. It’s essential.

A Widening Gap Between Street and Contract Rents

One of the most notable trends highlighted in this update is the growing divergence between street rents and contract rents. Since 2020, that spread has widened significantly, reflecting discounted move-in pricing paired with continued rent increases on in-place tenants.

This shift has important implications. As pricing becomes more dynamic and technology accelerates rent adjustments, the historical relationship between street and contract rents may be structurally changing. Operators and investors who actively track this spread, and understand its impact on revenue durability, will be better positioned to manage risk and identify opportunity.

Expenses Are the New Battleground

While revenue growth has slowed, operating expenses remain elevated. Across the major self-storage REITs, expense growth continues to outpace revenue growth, resulting in negative same-store NOI guidance for most operators.

In this environment, margin preservation is increasingly driven by execution. Tight expense control, operational efficiency, and disciplined pricing strategies now matter more than top-line growth alone.

Tax efficiency has also become a critical differentiator. Many self-storage owners continue to overpay property taxes due to misallocation of value between real estate and non-realty components such as goodwill and intangibles. Proper valuation and allocation can materially improve after-tax returns, particularly when NOI growth is under pressure.

Capital Remains Selective, Not Absent

Despite near-term challenges, investor appetite for the self-storage sector remains intact. Transaction activity has slowed, but institutional capital is still deploying selectively, with a focus on high-quality assets, disciplined development, and markets with restrained new supply.

A decelerating construction pipeline, stabilizing capital markets, and durable long-term demand drivers, household formation, downsizing, and ongoing urbanization, continue to support confidence in the sector’s long-term outlook.

The Bottom Line

The self-storage story has shifted from rapid growth to operational discipline.

In today’s market, performance is defined less by market tailwinds and more by execution at the asset level. Operators who can balance pricing discipline, sustainable ECRIs, expense control, and tax optimization are best positioned to preserve NOI, protect margins, and deliver durable returns.

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At Capright, we are uniquely positioned to support institutional investors, operators, and developers navigating this evolving environment. As an independent valuation and advisory firm, we provide clarity, accuracy, and confidence, especially where the stakes are highest.