The self-storage acquisition market has split into two tracks, and the more active one is not the one getting the most press coverage. While the Public Storage-NSA merger and the CubeSmart-CBRE joint venture have dominated the industry conversation in early 2026, a separate wave of deals is closing in markets most industry observers weren't watching: Colorado Springs, Houston's outer suburbs, the Rocky Mountains, and the Carolinas. These are not gateway markets. They are the places institutional capital overlooked during the 2020-2022 buying surge, and they are now the most active deal environment in the sector.
Argus Self Storage Advisors published its February 2026 market monitor under the title "A Tale of Two Markets: Soft Operations, Strong Values." The bifurcation they described is precise. Class A assets in top-tier metros continue to trade at historically low cap rates, with gateway cities (Los Angeles, New York, San Francisco) still seeing deals close in the high 4% to mid-5% range. Meanwhile, secondary and tertiary markets are clearing at 6.5% and above, with some tertiary assets and Class C properties pushing into the 7% to 8%+ range. That 150-to-300-basis-point spread is not a blip. It is the spread that is driving the current wave of non-gateway acquisitions.
Why Gateway Markets Have Stalled for Most Buyers
Cap rates in core urban storage markets have not moved meaningfully. Los Angeles, New York, and San Francisco facilities are still transacting at valuations that assume compressed yields, high barriers to new supply, and premium pricing power. Those assumptions are defensible in those specific markets. They are also nearly impossible to underwrite for buyers without either a major balance sheet or access to institutional JV capital.
The CubeSmart-CBRE joint venture is structured precisely to operate in that environment: CBRE's capital base absorbs the equity risk, CubeSmart's operating platform provides the management execution, and together they can underwrite at cap rates that a private buyer with conventional debt cannot touch. That vehicle opened in Phoenix, not New York, which itself signals where the JV sees actual deal flow versus where it would theoretically like to buy.
For every other buyer category, including regional operators, family offices, and smaller private equity platforms, the gateway math stopped working in 2023 and has not improved. The alternative is to move down the market tier ladder, where the yield premium is real and seller motivation is higher.
What Is Actually Transacting in Non-Gateway Markets
The deals closing in Q1 2026 tell the story more clearly than any forecast.
Spartan Investment Group completed the final closings on a nine-property portfolio spanning Colorado Springs and the greater Houston metro area through Argus Self Storage Advisors. The portfolio comprised 4,268 storage units and parking spaces across approximately 524,000 rentable square feet, with an additional 83,000 square feet of parking. The assets are described as modern, institutional-quality construction with strong demographics. Spartan acquired the Houston properties first (seven facilities) and closed the two Colorado Springs assets separately. Neither Houston suburban markets nor Colorado Springs would be described as gateway cities. Both are growing metros with functional demand and enough institutional-grade product to underwrite without speculative assumptions.
Uplift Development Group, a Colorado-based operator, acquired an 18-property portfolio in the Rocky Mountains region totaling 500,000 square feet across more than 3,000 units, spread across five cities. Rocky Mountain tertiary markets are exactly the type of geography that gets skipped in institutional portfolio sweeps: individual facilities are too small to move a REIT's needle, but a platform buyer acquiring 18 at once achieves operational scale that makes the math work.
Harrison Street Asset Management and Morningstar Properties closed a 21-facility acquisition in Arkansas, Florida, Georgia, North Carolina, South Carolina, Texas, and Virginia, totaling 1.3 million square feet and more than 10,800 units. Notably, 71% of those assets are located in top-30 metros including Houston, Austin, Charlotte, and Atlanta. The portfolio was 90% occupied at closing, with move-ins up 21% year-over-year. The Sun Belt secondary tier (Charlotte, Austin's outer ring, smaller Florida MSAs) is the sweet spot for this deal: large enough to attract institutional capital when packaged as a portfolio, but priced at yields that reflect the remaining supply pressure in those markets.
The Independent Operator Is the Seller
The common thread in all three deals is the seller profile: individual owners and regional operators who accumulated properties over the past 10-15 years and are now finding the platform competition too expensive to run alone.
This is not distress. Most of these facilities are stabilized, at or near market occupancy, and generating positive cash flow. The issue is structural. A self-storage REIT or large platform that deploys AI revenue management across hundreds of facilities, operates with lower per-unit labor costs, and accesses capital at rates unavailable to a private owner is systematically squeezing the margin advantage that independent operators once held. Running a 50,000-square-foot facility in Colorado Springs against that cost structure is increasingly a break-even proposition.
Argus noted in their 2026 forecast that well-capitalized owners in oversupplied markets are weighing whether the extended downward pressure on occupancy and rates will outweigh the cost of recycling capital. Some are selling at or near their basis. That type of rational exit is the deal flow that regional acquirers are capturing right now, before the next institutional wave prices them out.
Cap Rates by Market Tier: Where the Math Works
The current market structure by tier, drawn from SkyView Advisors, Argus, and transaction reporting through Q1 2026:
- Gateway cities (LA, NYC, SF): high 4% to mid-5% on stabilized in-place NOI
- Top-50 MSA stabilized assets: 5.75% to 6.15%
- Class B secondary markets: 6.0% to 7.0%
- Secondary/tertiary Class C or non-climate: 7.0% to 8%+
The top-50 MSA range of 5.75-6.15% is where most institutional buyers have been working for the past 18 months. Transactions in that range are happening at scale: through November 2025, approximately $5.9 billion traded across 681 assets. Q3 2025 alone accounted for $1.6 billion, a 62% increase over Q3 2024.
The question for 2026 is whether the capital that has been working the 5.75-6.15% tier will continue to find sufficient deal flow there, or whether compression of available stabilized product in that range pushes it further toward secondary and tertiary markets. The early evidence from Q1 suggests the latter. The buyers who are closing deals in Colorado, the Carolinas, and Houston's outer ring are not retreating from primary markets because of poor underwriting. They are moving where the volume is.
What This Means for Operators Below the REIT Tier
For an independent operator in a secondary market with one to five facilities, Q2 2026 represents something specific: the bid-ask spread has narrowed enough that buyers are active, the yield premium for their market tier is real and attractive to a defined buyer pool, and the platform consolidation story creates both the motivation to sell and the buyer universe to sell to.
The operators most likely to transact are those in supply-pressured markets where new deliveries over 2024-2026 have kept occupancy and rates compressed. Selling into a 6.5-7% cap rate environment at today's prices still produces meaningful value relative to basis for operators who bought or built before the 2020 surge. Waiting for fundamentals to improve and cap rates to compress is a reasonable thesis, but it requires confidence that the supply pipeline resolves on a timeline that fits the operator's capital needs.
The buyers currently active in these markets are not offering distress pricing. They are offering current-market pricing in exchange for execution certainty. For independent operators in secondary and tertiary markets who have watched institutional platforms outspend them on technology, marketing, and labor efficiency for three consecutive years, that offer is receiving more serious consideration in 2026 than it did in 2023.
The Numbers Worth Writing Down
- Argus Self Storage Advisors closed approximately $500 million in self-storage investment sales through its network in 2025
- Q3 2025 total self-storage transaction volume: $1.6 billion, up 62% year-over-year
- 681 self-storage assets traded through November 2025, totaling approximately $5.9 billion at average $145/sq ft
- Spartan Investment Group: 9-property Colorado Springs and Houston portfolio, 4,268 units, 524,000 sq ft
- Uplift Development Group: 18-property Rocky Mountains portfolio, 500,000 sq ft, 3,000+ units
- Harrison Street / Morningstar: 21-property Sun Belt portfolio, 1.3 million sq ft, 10,800+ units, 90% occupied
- Secondary/tertiary market cap rates: 6.5% to 8%+, versus high-4% to mid-5% in gateway cities
- 56% of industry experts surveyed expect little to no cap rate change through June 2026
The Spread Is the Story
The 150-to-300-basis-point cap rate differential between gateway and secondary markets is not narrowing in the near term. Supply-side pressure, compressed rents, and limited institutional appetite for individual sub-50,000-square-foot facilities in tertiary cities all keep secondary and tertiary yields wide. For the buyers structured to work in that tier, particularly regional platforms and smaller private equity operators who can achieve scale through portfolio aggregation rather than individual trophy assets, this is as good an entry window as the market has offered in four years.
The gateway deals will keep happening. The CubeSmart-CBRE vehicle will continue deploying in Phoenix, Dallas, and similar growth metros at low-5% cap rates, and the math will work for a buyer with CBRE's cost of capital. The rest of the acquisition market is moving on without them. The volume in 2026 is going to come from Colorado Springs, suburban Houston, and the Carolinas, bought by operators who ran the math and liked the spread.
Sources
- II-2026: A Tale of Two Markets: Soft Operations, Strong Values, Argus Self Storage Advisors
- I-2026: 2026 Self Storage Forecast: Soft Fundamentals, Strong Liquidity, Argus Self Storage Advisors
- Argus Self Storage Advisors Announces Sale of Landmark 9-Property Self Storage Portfolio in Colorado and Texas, Argus Self Storage Advisors
- Harrison Street, Morningstar Properties Acquire 21-Property Self-Storage Portfolio, RE Business Online
- Harrison Street Asset Management and Morningstar Acquire 21-Property Self Storage Portfolio Across High-Growth US Markets, Harrison Street
- Self-Storage Real Estate Acquisitions and Sales: March 2026, Inside Self-Storage
- Self Storage Sales Reach Nearly $1.6B In Q3 2025 As Transaction Activity Jumps By 62% Compared To Previous Year, StorageCafe
- Q4 2025 Self-Storage Industry Report, SkyView Advisors
- Trends in Self-Storage Investing for 2026, Inside Self-Storage