he average cap rate the last eight quarters was 5.72 percent in a range from 5.66 to 5.83 or only 17 basis points (bps), a steady and narrow range. It is another indicator of the steady and resilient characteristics of self-storage in uncertain macro-economic conditions and investment markets. This steady, if not dull, trend is reflected in the the Treasury Spread & Self Storage Sales chart. Interestingly, the cap rate spread to 10-year Treasuries averaged 150 bps over the last eight quarters, but a wider range as a function of dynamic Fed movement and slower market reactions. Overall, the Treasury spreads have been at record lows in the last eight quarters compared to the 20-year time trend.

See Treasury Interest Rates & Self-Storage Cap Rates chart.

The self-storage team at Newmark Valuation & Advisory surveyed over 50 market participants about a wide variety of data points, including the usual cap rate, terminal cap rate, and yield rates. Key performance indicators are shown in the Segmentation by Investment Quality table.

See Segmentation by Investment Quality Q2 2025 table.

The Second Quarter 2025 Investor Survey by Newmark indicates an average cap rate of 5.68 percent or down -5 bps from last quarter. The change was down -10 bps in Class-B and -5 bps in Class-C sectors. Similar spreads are reflected in the Discount Rate (IRR) and Terminal Cap Rate.

Many market participants expressed a belief or hope that interest rates would decline somewhat this year, suggesting lower cap rates. We note a similar sentiment in the past eight quarters, but exogeneous factors such as the election, global warfare, and U.S. tariffs have created uncertainty. As a result, we have seen three directional changes in investment rates over the last eight quarters.

Going forward, investment rates are likely to remain steady, pending clear direction in macro-economic conditions and 10-year Treasuries. Comparing self-storage market conditions to standard unit sizes (such as 5-by-5, 5-by-10, or 10-by-10), market sentiment seems to indicate a 5-by-10 outlook for the next quarter.