The Historical Outperformance of Self Storage: What Investors Should Know

September 22, 2025

A Hidden Giant. Why Self Storage Deserves a Closer Look

If you’ve historically tilted your real estate allocations toward multifamily, retail, industrial, or office real estate sectors, you’re not alone. These property types often dominate headlines and real estate holdings in model portfolios. However, by focusing exclusively on these big four, you may miss a consistently overlooked top-performing asset class: self storage.

Over the past 20 years, self storage has quietly delivered the highest average annual returns of any commercial property type, according to NCREIF data¹. It has outperformed across various interest rate regimes, economic cycles, and real estate trends, with reduced operational friction and greater pricing flexibility.

And yet, it remains dramatically under allocated across many portfolios among accredited and high-net-worth investors. This blog examines what enables that outperformance and why self storage warrants more attention in today's environment.

The Return story. Self Storage vs. Traditional CRE Sectors

The performance data speaks for itself. Since 1994, the NAREIT self storage index has delivered cumulative returns far exceeding those of multifamily, industrial, office, and retail.

Include charts and sources from slide 24 in Pitch Deck Fund III from DXD Capital.

Even when accounting for volatility, self storage maintains one of the highest risk-adjusted return profiles in commercial real estate. It’s no coincidence that several of the most successful REITs in the past two decades have been storage-focused².

Despite its reputation as a “boring” or secondary sector, self storage is delivering top-tier results by most objective metrics, and it’s doing so with less complexity than the alternatives.

Built-in Advantages That Drive Performance

Revenue Agility

Self storage leases are typically month-to-month, giving operators the flexibility to adjust pricing frequently based on seasonality, occupancy, or local demand shifts. According to Yardi Matrix, self storage operators adjusted rates upward in 24 of the top 30 U.S. metros in May 2025, despite broader economic softening⁴. In contrast, multifamily and office leases are often locked in for 12–36 months, limiting flexibility in rent growth.

Operational Efficiency

Most self storage facilities operate with just 1–2 full-time employees. There's no need for on-site leasing agents, maintenance technicians, or amenities staff.

Customers rent online, access units with digital codes, and manage accounts through automated systems. Turnover is also frictionless. A vacated unit requires little more than sweeping and re-locking.

CapEx Light

Capital expenditures (CapEx) are one of the most misunderstood drivers of real estate performance. While multifamily investors routinely allocate 15–20% of NOI to capital expenditures for items like appliance replacement, HVAC systems, and code compliance, self storage typically spends just 4–5% of NOI.

Why? Storage units don’t require ongoing upgrades. No kitchens, no plumbing, no flooring replacement. That translates to higher net operating margins and fewer surprises.

Secular Tailwinds Supporting Future Growth

The case for self storage isn’t just historical, it’s structural.

Demographics Are Shifting

Self Storage reports that while Baby Boomers lead the charge in the number of people using self storage today, at 42%, with Millennials not far behind at 35%, Gen Z is poised to take a leadership role, with a planned 50% of their population planning to use self storage in the future⁵.

Urbanization and E-Commerce Expand Use Cases

In dense urban markets, self storage fills a gap between limited living space and flexible needs, whether it’s storing outdoor gear, seasonal items, or business inventory. As e-commerce continues to accelerate among small businesses, many entrepreneurs are turning to storage units for cost-effective warehousing solutions.

Limited New Supply Creates Opportunity

Following a surge of development from 2018 to 2022, the construction pipeline is now constricting. Yardi Matrix reports that new development starts are down 19% in 2025, with just 2.8% of existing inventory under construction, well below the replacement pace seen in multifamily or industrial⁶.

High interest rates, tighter lending, and municipal resistance to new approvals have created a supply-side constraint, supporting rent stability and occupancy for existing assets.

Institutional Pullback Creates Room for Agile Capital

Institutional investors are slowing allocations across real estate, leaving a gap in the market for well-capitalized, vertically integrated sponsors to source deals that meet strict underwriting criteria. That’s where platforms like DXD Capital can find mispriced value in today’s market, acquiring at below-replacement cost or recapitalizing distressed deals with upside potential.

Why Most Investors Miss It and Why That’s Changing

Despite the data, self storage remains underutilized in many investor portfolios. Why?

It’s not a default allocation in many model portfolios.
Historically, access to high-quality private storage deals has been limited.
It simply doesn’t get the marketing promotion of other sectors.

But that’s changing. Today’s sponsors are bringing institutional rigor and transparency to self storage investing, making it easier for accredited and high-net-worth investors to evaluate, understand, and allocate to the asset class with confidence.

The market is creating an opportunity for smart reallocation, not just diversification. As other sectors struggle with high capex burdens, softening rents, or tenant risk, self storage continues to show signs of operational consistency and strategic upside.

If you’re focused on portfolio construction for income, stability, and long-term growth, self storage deserves a seat at the table. The historical performance is undoubtedly a compelling reason to take a closer look, and the current conditions suggest it may continue leading the pack.