The Gap Between What Self-Storage Sellers Want and What Buyers Will Pay Is Finally Starting to Close

Written by:

Heather Hook

Date:

03 Jun 2026

KeyCrew Studio

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Transaction volume in self-storage has been slower than buyers and sellers would both like. Capital is ready to deploy, and assets need to trade. But the gap between what sellers believe their properties are worth and what buyers are prepared to pay has kept a significant portion of the market on hold. That standoff is starting to shift, and not entirely by choice.

Tom de Jong, Executive Vice President at Colliers and Founding Principal of the De Jong Self Storage Team, has tracked this across dozens of active deals over the past 18 months. His view of where the friction sits and what is beginning to move it offers a clear picture of where the market is heading.

Where the Gap Comes From

Most of the assets struggling to trade were built or underwritten in 2021 and 2022, when the market looked very different. Sellers pencilled deals at four and a half to five percent cap rates on projected rents that assumed consistent annual increases of five to seven percent. Those projections were reasonable at the time. They are not the reality today.

Achieved rents on many newly built properties are well below original projections. Occupancies are solid in some cases, often in the mid-to-high 80 percent range, but the income those properties are generating does not match the initial underwriting. Combined with a higher interest rate environment that has pushed cap rates to the five-and-a-half-to-seven percent range, depending on the market, asset values have fallen well below where sellers expected to exit.

Buyers, for their part, are underwriting today’s achieved rents, with flat rate assumptions going forward rather than the aggressive growth projections that characterised the 2021 vintage. The math on both sides is internally consistent. The problem is that the two sets of numbers produce very different valuations for the same asset.

How Buyers Are Thinking About the Gap

Sophisticated buyers have a structured way of pricing these deals, one that centers on the spread between achieved rents and current market rents.

If a facility’s achieved rate is $1.25 per square foot but the market supports $1.50, a buyer will give partial credit for that upside, but not full credit, and not at the cap rate the seller wants. The discount applied reflects the time and risk involved in closing that gap through existing customer rate increases. The seller wants to be paid at market value. The buyer wants to purchase at an achieved income with a risk-adjusted discount for closing the gap. When a deal happens, it lands somewhere between those two positions.

Bridge Loan Programs and the Assets Getting Quietly Handed Back

The more acute pressure is coming from a specific corner of the market. The major REITs have operated bridge loan programs that extended financing to operators and developers at up to 90 percent of the projected value. Many of those projections are nowhere near where the assets actually landed.

As a result, some of these bridge loans are now sitting at 110 to 120 percent of current asset value. When the interest reserves on those loans run out, operators face a binary choice: inject more capital to keep the loan current, or hand the keys back to the lender.

De Jong reports that in a single week at the time of this conversation, he heard of three or four situations where parties quietly returned assets to their bridge lenders. There are no auction listings and no press releases. It is a private, negotiated process of transferring problem assets. But the pipeline of these situations is real, and lenders who take back those assets will need to mark them to market and find buyers.

For buyers who are positioned and ready, this creates a specific opportunity. The asset quality may be sound, the location solid. The issue is the capital stack, and when that gets resolved through the transfer process, an acquiring buyer can come in at current market pricing rather than the inflated projections from three years ago.

What Moves the Market From Here

The bid-ask spread will not close on its own. It closes when sellers run out of road. Private equity funds have defined timelines, typically five to seven years, and that capital has a shelf life. Recapitalisation at current rates is expensive, and the option to wait carries a cost that compounds over time.

De Jong is seeing transaction volume pick up heading into 2026. Opinion of value requests is increasing, which typically leads to deal flow. Portfolio transactions are also happening, including enterprise-level acquisitions by institutional buyers with capital committed and a need to put it to work.

The market will not clear all at once. But sellers who price to current realities are finding buyers. Those waiting for a return to 2021 valuations are likely to wait a long time. For more on active deal flow and market listings, visit Colliers Properties.

About Tom de Jong: Tom de Jong is Executive Vice President at Colliers and Founding Principal of the De Jong Self Storage Team. With 19 years at Colliers, a $2B+ transaction record across 32 states, and an SIOR designation, he is one of the most recognised specialists in self-storage brokerage and investment advisory in the United States.

This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.

Disclosure: Individuals or companies mentioned may have a commercial relationship with KeyCrew.