Investing.com -- Storage landlords are showing early signs of stabilisation after years of pricing pressure, with RBC Capital Markets arguing that “most things are in place for a storage recovery.”
Market rents, which turned negative in late 2022, have finally moved back into positive territory, helping reinforce the view that “the storage sector has seen a trough," RBC analysts led by Brad Heffern said in a note.
Move-in rates reached neutral by mid-2025 and turned slightly positive between August and October, supported by 3% rate gains at CubeSmart and Extra Space in the third quarter.
Pricing strength has come with softer occupancy, underscoring customer price sensitivity, but RBC believes the sector’s inflection point is becoming clearer. The key question now is how quickly stronger pricing can translate into same-store revenue growth.
Demand, however, still lacks a catalyst, according to RBC. Storage usage tied to life events remains steady, but the housing market remains a drag.
Home sales are roughly 25% below 2019 levels, limiting move-related demand, and the firm notes that mortgage rates, while lower than a year ago, “are still not at a level that would encourage a significant increase in moving velocity," the analysts wrote. They estimate the housing slump has created a roughly 5% demand headwind.
Supply trends also remain a constraint. New rentable square footage under construction has declined only 15–20% from peak levels and is still comparable to 2019 oversupply conditions. With lease-up periods stretching three to four years, RBC warns that “the negative impact from supply will continue to be felt for years.”
Valuations, though, look more attractive than they have in some time. Storage REITs now trade at implied cap rates in the high-5% range and at discounts relative to private-market benchmarks. Analysts say this provides a cushion as growth gradually improves, even if the sector’s historical premium to net asset value (NAV) has not fully normalised.
For 2026, RBC maintains a “mildly positive” stance, citing a better pricing trajectory, more compelling valuations, and improved occupancy trends. CubeSmart is the firm’s top idea, supported by its urban footprint, NYC exposure, and valuation discount versus peers.
The broker also highlights CUBE’s lower occupancy and more meaningful upside from potential third-party management wins.
