Investing in Self-Storage REITs

Understanding self-storage REITs

Self-storage properties are small warehouses with multiple units that range in size. Owners lease storage units in these buildings to businesses and individuals who need space to store inventory or household items. Some self-storage operators will also rent parking spaces to store boats, RVs, and other vehicles.

Most self-storage units rent on a month-to-month basis. That differs from the lease structure of many other REITs, which typically own properties that lease space for a year or more. On the one hand, the shorter-term lease structure enables self-storage REITs to raise rents more frequently to market rates. On the other hand, they might have to reduce rents during a down market.

In addition to generating rental income, self-storage REITs have several other potential revenue sources, depending on their business model. These can include tenant reinsurance income, late fees, management fees, and the sale of moving materials (boxes, packaging, tape, etc.).

Advantages of investing in self-storage REITs

Self-storage REITs have several attractive investment qualities, including:

• Steadily rising demand: Storage space demand drivers include relocation, decluttering, disasters, changing life circumstances, and business purposes. These factors tend to keep occupancy levels high while steadily pushing rental rates higher. 
• Low break-even levels: Self-storage properties are one of the lowest-cost real estate investments since they're typically inexpensive to build and operate. As a result, they tend to have relatively low occupancy break-even rates. These factors enable self-storage investments to generate high margins and investment returns.
• Strong historical returns: Self-storage REITs have historically been among the best-performing investments in the REIT sector. They have significantly outperformed other real estate investments over the past decade, including leading REIT ETF Vanguard Real Estate ETF (VNQ -0.40%).

Risks of investing in self-storage REITs

While self-storage REITs have been excellent long-term investments, they're not without risk. There are two notable sector-specific risks:

• Oversupply risk: Because self-storage facilities are cheap to build and operate, there are low barriers to entry. Developers can quickly build new capacity, which can increase competition for customers in a market, weighing on occupancy levels and rental rates at existing facilities. 
• Economic risk: Due to the short-term nature of self-storage leases, the sector has more exposure to an economic downturn. If the economy takes a hit, fewer people will move. Businesses might also cut back expenses, impacting occupancy and rental rates. 

In addition to those sector-specific risks, self-storage REITs face two intertwined potential headwinds common to the entire REIT sector:

• Financing risk: As interest rates rise, borrowing money becomes more expensive. If a REIT has lots of floating-rate debt or near-term maturities, rising rates can increase its interest expenses. Higher interest rates can also affect a REIT's ability to finance acquisitions and development projects.
• Interest rate risk: Rising interest rates tend to weigh on REIT stock prices. That's because it makes lower-risk alternatives such as bonds more attractive investments since their income yields rise. As a result, REIT stock prices tend to fall, pushing up their dividend yields to compensate investors for their higher risk profiles. 

The best self-storage REITs to buy right now

There were a handful of publicly traded self-storage REITs in 2025. While all focus on owning, operating, and managing self-storage facilities, three of them stand out for their slightly differentiated business models.

National Storage Affiliates (NSA +0.34%) had more than 1,067 self-storage properties across 37 states and Puerto Rico, with about 69.7 million rentable square feet as of late 2025. It focuses on owning properties across the country's top 100 metro areas.

What's unique about National Storage Affiliates is that it doesn't consolidate its properties under one national brand. Instead, it owns, operates, and manages strong regional brands.

The company was undergoing an internal consolidation strategy to transition from a dozen brands to seven market-focused brands. This strategy will strengthen its core brands and reduce costs, which should enhance its returns. It can then leverage those stronger brands to expand in their markets by acquiring smaller rivals and transitioning them to the more-focused regional brand.

Factors to consider when choosing self-storage REITs

Investors need to evaluate a few things before adding a self-storage REIT to their portfolio, including:

• Size: Whether to invest in a larger-scale REIT or a smaller one with more growth potential.
• Development strategy: Some REITs only invest in stabilized operating properties while others engage in ground-up development, which is a higher-risk, higher-reward strategy.
• Portfolio mix: Some REITs focus more on owning self-storage properties, while others have a third-party management platform.
• Geography: Some REITs only own properties in certain U.S. markets, while others are more broadly diversified, including internationally.

Ways to invest in self-storage REITs

Investors have a few ways to add self-storage REITs to their portfolios:

• Direct stock purchases: You can buy one or more self-storage REITs through your brokerage account.
• ETFs: You can buy a REIT exchange-traded fund (ETF), which provides passive exposure to self-storage REITs as well as those that own other property types.
• Mutual funds: Another option is to buy a REIT mutual fund, which, similar to a REIT ETF, provides exposure to self-storage and other REITs.
• Real estate investment funds: You can also consider a private real estate investment fund, some of which focus specifically on owning self-storage properties. However, these funds are often only open to accredited investors and typically have high investment minimums.

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