- DXD Capital’s 2025 lender survey shows more than 94% of lenders maintain the same appetite for self storage loans as last year, signaling stable demand despite higher interest rates and market uncertainty.
- Tighter underwriting reflects concerns over lease-up absorption, oversupply, and macroeconomic headwinds, with regional bank pullbacks adding to caution.
- Acquisition loans remain the top target (94%), followed by ground-up construction (88%) and refinancing (71%), while fewer lenders are pursuing bridge, transitional, or conversion loans.
According to Globe St, the self storage sector continues to draw lender interest, but the days of looser lending seen in 2021 and 2022 are over. DXD Capital’s 2025 lender survey reports that while loan appetite remains strong, underwriting standards are now more conservative, aimed at controlling exposure and managing potential risks.
A Market in Shift
Interest rate hikes have pressured commercial real estate broadly, causing distress in some assets and keeping construction lending across property types—including self storage—subdued for the near term. Even so, 94% of respondents said their appetite for self storage lending hasn’t changed from a year ago, and nearly three-quarters reported no loan restructurings or extensions in the past 12 months, underscoring relatively steady performance.
The Portfolio Picture
Most lenders keep self storage loans under 25% of their total CRE portfolios. Nearly half say performance matches other property types, while roughly 25% see it underperforming. The most frequently cited underwriting concern is absorption risk during lease-up, followed by oversupply, sponsor capabilities, and construction costs. Broader economic and regulatory worries—such as high interest rates, CRE price softening, and recession risks—also weigh on outlooks.
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Loan Focus Areas
Acquisition lending leads the way, with 94% of respondents targeting such deals. Ground-up construction remains a priority for 88% despite tighter standards, while 71% are looking at refinancing opportunities. Smaller shares are pursuing bridge or transitional loans (35%) or conversions, such as repurposing retail space into storage (18%).
Why It Matters
The survey points to a lending environment defined by selectivity and risk management, not retreat. While underwriting is tighter, lenders are still deploying capital into self storage—a sign the asset class continues to earn its reputation as a resilient niche within CRE.
