- Self-storage shows little correlation to the broader economy, making it one of the most resilient and low-risk asset classes in CRE.
- Over the past 15 years, self-storage outpaced industrial, multifamily, retail, and office in net operating income growth.
- Despite current REIT underperformance, fundamentals remain strong with long-term demand driven by life events like moving, downsizing, and family changes.
A Rare Economic Outlier
Unlike most real estate sectors, self-storage is not heavily influenced by interest rates, employment data, or GDP, reports CNBC. Demand remains steady because people need space during key life transitions. These events happen regardless of market conditions. Heitman, a real estate investment firm with $10.5B in the space, says the asset class is “close to zero” in correlation with broader economic indicators.
Performance Over Time
Heitman reports that self-storage has outperformed all major property types over the past 15 years. This includes industrial, multifamily, office, and retail in terms of net operating income. Its consistent demand is driven by common life events like growing families, moving, downsizing, and remodeling.
“This sector is as close to risk-free as you can get,” said Jeff Bingham, co-head of global investment research at Heitman, citing 30 years of data from listed self-storage REITs.
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Recent Headwinds And A Potential Opportunity
Despite strong fundamentals, shares of major players like Public Storage, Extra Space Storage, and CubeSmart are down as much as 16% year to date. The decline is largely due to softer home sales and slower revenue growth. But Heitman researchers see this as an attractive entry point, given long-term tailwinds.
Demographic Drivers
The aging US population and a wave of millennial family growth are fueling future demand. “These general life events—welcoming a child, downsizing, or helping aging parents—occur regardless of the economy,” said Annie Trucco, senior associate at Heitman.
Low CapEx, High Margins, And Localized Demand
The sector offers strong operating margins, minimal capital expenditure needs, and inflation protection through flexible month-to-month leases. Add in declining asset values—down 11% from peak—and constrained new development, and self-storage presents a compelling value proposition.
Why It Matters
With demand patterns that are both predictable and economically agnostic, self-storage provides a rare combination of stability and upside. In a volatile macro environment, investors looking for yield with lower risk may increasingly look to this corner of CRE.
