Self-storage valuations look most stretched of all main sectors

Self-storage cap rates are roughly on par with the 10-year Treasury yield, which is well short of the 200bps spread seen over the last 10 years. Coupled with an uninspiring outlook for rent growth, this leaves self-storage looking more overvalued than any of the major sectors and points to a significant cap rate rise still to come. When the sector is added to our published forecasts this quarter along with senior housing it looks set to find itself at the bottom of the pack.