“But the consolidation of the industry is not stopping,” Boorstein says, and cap rates haven't really changed much. Sovereign wealth funds, private equity, and family offices have begun snapping up properties that a year or two ago would probably have gone to one of the REITs. “They see this as an opportunity, so instead of getting 15 offers on every deal, we get 10.”

Boorstein also sees signs that the pause by the sector's big REITs is temporary, and may end soon. None has actually stopped making acquisitions, he points out. In the first half of 2017, for example, Public Storage, by far the largest self-storage firm, acquired for $34.4 million seven facilities across the US. And even if the REITs have become more cautious about pulling the trigger, “they are already looking at every deal.”

CHICAGO—The self-storage sector has been riding high for several years, outperforming most others in terms of revenue growth, but a big change has occurred. Growth in occupancy and revenue has slowed for its major REITs, along with their stock prices. As a result, these companies have slowed down acquisitions, thereby opening up opportunities for private investors in the still-vibrant sector.

“Growth has slowed from a breakneck pace to something more normal,” Marc Boorstein, a principal with self-storage firm MJ Partners, tells GlobeSt.com. The Chicago-based company just published an analysis of the sector, and found that self-storage REITs such as Public Storage and Extra Space Storage generated same-store revenue growth in the second quarter ranging from 1.4% to 5.8%. Two years ago, the same figures ranged from around seven to nearly ten percent.

That new, more moderate pace has brought total returns back down to earth. The big five REITs, which also includes CubeSmart, Life Storage, and National Storage Affiliates, saw returns down 3.7% this year, according to Wells Fargo, after an 81% increase in the previous five years, Boorstein says.

The big five are no longer looking to make billion-dollar acquisitions, at least for now, he adds. Last year, their purchases totaled $5 billion, but so far in 2017, acquisition volume is down 70%.

“But the consolidation of the industry is not stopping,” Boorstein says, and cap rates haven't really changed much. Sovereign wealth funds, private equity, and family offices have begun snapping up properties that a year or two ago would probably have gone to one of the REITs. “They see this as an opportunity, so instead of getting 15 offers on every deal, we get 10.”

Boorstein also sees signs that the pause by the sector's big REITs is temporary, and may end soon. None has actually stopped making acquisitions, he points out. In the first half of 2017, for example, Public Storage, by far the largest self-storage firm, acquired for $34.4 million seven facilities across the US. And even if the REITs have become more cautious about pulling the trigger, “they are already looking at every deal.”