Wolfe Research is revising expectations for U.S. self-storage real estate investment trusts, saying near-term fundamentals remain lackluster and that an earnings recovery is likely to arrive only in 2027. The firm now sees sector earnings growth essentially flat in 2026, with more meaningful expansion of roughly 3% to 4% appearing in 2027.
Analysts at Wolfe point to demand dynamics that are increasingly aligned with other commercial real estate segments, especially the dependence on employment trends, which have remained muted. On the supply side, new development is slowing but has not fallen to historically low levels that would produce a sharp improvement in fundamentals.
Housing market behavior is another influence. Wolfe notes that low housing turnover has been a headwind for storage demand. That circumstance, however, could create easier year-over-year comparisons if mobility accelerates. Still, the firm cautions that policy efforts aimed at improving housing affordability are unlikely to produce a rapid boost to storage demand.
As a result of its updated outlook, Wolfe adjusted coverage of several names in the sector. Public Storage and CubeSmart were downgraded to Peer Perform from Outperform, with Wolfe estimating two-year earnings growth of about 2.7% for Public Storage and roughly 1.8% for CubeSmart. Those projected growth rates fall below the average two-year growth profile Wolfe expects for other REIT sectors through 2027.
Conversely, National Storage Affiliates was upgraded to Peer Perform from Underperform. Wolfe cited guidance from the company that suggests its same-store growth gap relative to peers could narrow and that leverage could support stronger earnings in 2027.
Notably, Wolfe now has no Outperform ratings covering the storage REIT sector, a first during its coverage of the group. The firm acknowledged that storage REITs have historically been among the better-performing REIT subsectors, a track record it attributes to disciplined capital spending and management focus on returns. Nevertheless, current valuations, Wolfe argued, leave little room for disappointment.
In valuation terms, Wolfe finds sector price-to-earnings-growth ratios for 2026 to 2027 unattractive on the back of its updated forecasts. While the metrics improve when attention is limited to 2027 alone, the firm warned that recent investor enthusiasm about a potential housing-driven rebound has raised performance expectations for the near term.
Wolfe suggested a more compelling entry point for investors could emerge later in 2026, but only if earnings trends stabilize and growth begins to recover in line with its updated timeline.
Summary
Wolfe Research now expects flat earnings for storage REITs in 2026 and modest growth in 2027. The firm downgraded Public Storage and CubeSmart, upgraded National Storage Affiliates, and removed all Outperform ratings for the sector, citing muted demand, still-easing supply, low housing turnover, and valuations that offer limited upside.