What Multifamily Investors Should Know About Self Storage

If you’re invested in multifamily real estate, you already likely understand the benefits of recurring income, property appreciation, and long-term demand for housing. But there’s another property type that shares many of these advantages, while offering some unique benefits that may help balance and strengthen your portfolio: self storage.

For decades, many institutional investors have held both multifamily and self storage assets. That’s because while they differ in tenant profile and use, the two sectors tend to complement each other in terms of performance and resilience.

Performs in Both Good and Bad Times

Self storage can generate returns in both growth and recessionary cycles. In strong economies, demand grows with business expansion, moving, and remodeling. In tougher times, people downsize or store belongings during transitions, creating what some call “recession-resistant” demand.

Easier to Manage, Higher Margins

Multifamily properties can be management-intensive. Leases are longer, turnover is costly, and repairs can be expensive. Self storage, on the other hand, is relatively low-touch: typically fewer repairs, lower staffing needs, and minimal turnover costs. These factors help self storage properties achieve higher profit margins, often over 65% for well-run facilities1.

More Flexibility, Less Regulation

One of self storage’s most appealing features is flexibility. Leases are typically month-to-month, allowing operators to adjust rents quickly in response to market conditions. In contrast, multifamily lease terms and rent control laws in some cities can limit an owner’s ability to respond to inflation or changing demand.

A Long-Time Favorite of Institutions

Large real estate investors, including pension funds and REITs, have consistently allocated to self storage alongside multifamily. Why? Because it offers a different set of risks and rewards, often helping smooth out returns over time. Diversifying into self storage doesn’t mean walking away from multifamily; it means broadening your opportunity set with another proven, income-generating property type.

The Bottom Line

If you're already invested in multifamily, self storage may be a natural next step. It can offers many of the same long-term benefits plus some distinct advantages in management, flexibility, and resilience. As market cycles shift, having both property types in your portfolio could help deliver more stable, diversified results.

Sources

1. DXD Capital, Internal Market Research.