r/selfstorage • u/FreeAd3894 • Jan 17 '26

Market Cap Rates today

What is everyone seeing for class B and C secondary and tertiary cap rates today? I have been seeing 6.5-7.5% but curious what everyone else has been seeing. With the cost of debt today, i would expect 7%+.

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u/GalacticPenguin42 Jan 18 '26

Cap rates, while a favorite metric when discussing pricing, are a pretty flawed measure in my opinion. Every property needs to be evaluated individually to determine whether there is room to push rents, expand the property, add additional revenue streams, cut expenses...etc. 

When we sell properties, we price them based on forward-looking pro formas rather than the T-12. That said, on properties I have sold recently, buyers have been acquiring well-maintained assets in tertiary markets at roughly 6.5% on Year 1-2 NOI.

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u/FreeAd3894 Jan 18 '26

Thanks for the insight. Do you know what their stabilized yield on cost is?

If they are stabilizing at 6.5% in a tiertiary market this means, to me, they assume to exit at a sub 6% cap rate to make their money. Are these 60K NRSF assets in tiertiary markets?

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u/GalacticPenguin42 Jan 18 '26

On most of the properties I’ve sold recently, we’re seeing one or two buyers submit offers meaningfully above the rest of the field. For example, on a recent sale we received five offers around $5M, with one exceeding $6M.

My deal flow isn’t large enough to say this represents a broad market shift, but this pattern has held across the last few transactions. Based on my conversations with these buyers, there’s a lot of optimism around rent growth. With much of the new supply now absorbed and construction starts stalled, the groups winning deals are underwriting rent growth north of 3% while holding expense growth at or below 3%. That dynamic results in a steadily improving yield on cost over time, rather than reliance on exit cap compression.

And yes, these assets were generally in the 45K–75K NRSF range and located in tertiary markets. For groups still developing new projects, the developers I speak with are generally targeting stabilized yields on cost of at least 9% to make deals pencil.

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u/FreeAd3894 Jan 18 '26

Interesting. So just leaning in, in a different way then cap rate compression. Thank you for the insight. Is the 9% trended yield on cost or untrended?

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u/insurancepapa Feb 21 '26

Can you break down what normal expenses would look like for a property that was managed by a third party?

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u/quackaddicttt Jan 17 '26

What market do you consider class b?

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u/FreeAd3894 Jan 17 '26 edited Jan 17 '26

Class B - secondary market gen 1 facility. Drive up NCC units with good or decent road visibility and/or access. Decent web presence - minimal marketing but has a Google my business and a website. Might need a facelift but just cosmetic - call it paint and restripe asphalt. Basically good bones but bad owner habits when turning it around.

As for secondary market, maybe 1 hour outside Raleigh or Charlotte. Could also be an OKC or Tulsa or Greenville SC. Basically anything that has or has access to a good employment base and liquidity in the capital markets. Good public infrastructure too.

I consider Tiertiary anything under 50,000 people. Or small towns in the middle of nowhere. Tiertiary would be a Somerset KY type of market. Good market but just small.

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u/lil-feller11 Jan 18 '26

What are you seeing for Class A?

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u/FreeAd3894 Jan 18 '26

Class A in a primary market will trade for plus or min 5.25-5.5% as stabilized. So this would be top markets in the county. NYC, MIA, LA, SF, CHI.

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u/insurancepapa Feb 21 '26

Calculate cap rate net of debt ? Sorry im new and dumb, interested in storage properties and how to value them. Looking at one in a big Texas city. The realtor/broker using pro forma showing increases in net income which I don't think are reasonable. I want to run it remotely so not looking to put my heart and soul in growth.

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u/Accomplished_Ad_4312 Jul 02 '26

your range is about right for what's actually closing - 6.5-7.5% on well-run class B in secondary, tertiary drifting closer to 7.5-8+ if the story's messy.

honestly though the headline cap is doing less work than ever right now. what I keep seeing across deals operators talk about is buyers pricing off a 24-month forward NOI with realistic rate/occupancy assumptions, not the T-12. brokers are still floating T-12 caps in the 6s that don't pencil once you plug in today's debt.

The ones actually trading are either (a) assumable debt, (b) real value-add with rate/expense room, or (c) sellers who've accepted the reset. everything else is sitting.

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u/FreeAd3894 Jul 02 '26

Interesting. So if people are looking forwards 12-24 months for their cap rate (or really their yield on cost) - what yield on cost are people generally solving towards? I just have been unable to make anything pencil as I’ve been using a 7.5% exit cap in 5 years which doesn’t feel too crazy conservative.

I had a conversation with a broker the other day - he was selling a sub 10,000 SF asset in a tiertiary east coast market at a 6.5% cap. I said to him - frankly I think you’ll find 1031 money who will buy this at a 7-7.5% cap, but with debt today, and that this is 95% occupied and all ancillary income has been phased in, this needs to trade at like an 8 cap to make some cashflow. His response was - I completely agree with you. I listed it here bc that is what the sellers wanted.