BOSTON—Cap rates in the self-storage space continue to compress as spreads widen compared to 10-year Treasuries, according to a Self Storage Investor Survey released by CBRE's Valuation & Advisory Services. The survey comes a few days after Marcus & Millichap forecast increasing consumer demand for self-storage facilities, despite an accelerated pace of new construction.
Spreads rose at midyear to 395 basis points over the 10-year, an increase of nearly 14% over the end of 2015. This compares well with the 15-year average spread of 406 bps for the sector, according to Chris Sonne, EVP and national self storage valuation group leader at CBRE Valuation & Advisory Services.
Sonne notes that the current level is higher than the 2013 level of 320 bps, and is significantly higher than the spread low of 254 bps in 2006. He adds that this suggests cap rates will continue to compress and that self-storage may be less impacted by an increase in interest rates than other core real estate sectors.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
