For a while, underwriting self-storage deals felt predictable. Debt was cheap, cap rates were tight, and the path to value creation was relatively clear.
That environment has changed.
Interest rates remain elevated compared to the ultra-low borrowing costs investors grew accustomed to in the early 2020s. Lenders are more cautious. And buyers are approaching deals with a much sharper pencil.
In recent conversations and lunch-and-learn discussions with owners and investors, one theme keeps coming up: the way deals are being underwritten today looks very different than it did just a few years ago.
Here’s what we’re seeing.
Debt Is Driving the Conversation
In today’s market, financing terms often determine whether a deal works before anything else.
Higher borrowing costs mean owners are paying closer attention to:
In our recent lunch-and-learn discussions, several investors noted they’re underwriting deals assuming rates may stay higher for longer, rather than banking on quick rate cuts.
That shift alone changes how aggressive buyers can be.
Deals that penciled easily a few years ago now require more conservative assumptions.
Buyers Are Stress Testing Deals More Aggressively
Another noticeable shift is how investors are modeling downside risk.
Instead of underwriting purely to the upside, buyers are asking tougher questions:
Several owners at our recent lunch session mentioned they’re running multiple scenarios before committing — not just the “best case.”
That doesn’t mean deals aren’t happening. It just means buyers want more certainty before moving forward.
Yield Expectations Have Adjusted
In the past, investors often relied heavily on appreciation and rent growth.
Today, many owners are focusing more on in-place income and realistic yield.
That means:
In other words, investors want deals that make sense today, not just five years from now.
Creative Structures Are Showing Up Again
With traditional financing tighter, some owners are getting creative.
We’re seeing more conversations around:
These approaches can help bridge the gap between buyer expectations and seller pricing.
They’re not new strategies — but they’re becoming more relevant again in today’s environment.
Deals Are Still Happening — Just Differently
Despite the shifts in the capital markets, deals are still closing.
What’s changed is the level of discipline around them.
Investors today are:
And in many cases, that’s leading to healthier deals overall.
Final Thought
Interest rates may have changed the landscape, but they haven’t eliminated opportunity.
They’ve simply forced investors to return to fundamentals.
In conversations with owners and investors — including insights shared during our recent lunch-and-learn discussions — the takeaway is clear: today’s deals are being underwritten with more discipline, more scrutiny, and a longer-term perspective.
And in the self-storage industry, that kind of discipline has historically been a good sign for the market.
If you’re looking to buy, sell, or refinance a property, we’d love to connect and see how we can help. Contact Us
