Self Storage Market Cycle

[Petro B.]

I am relatively new to real estate syndication but am exploring opportunities to invest in self storage as a passive investor. On the surface, self storage sounds like a great investment - low maintenance, recession resistant, multiple cash flow sources, easier to do value-add than MF, etc. But after doing some research, the following trends have come to light:

- Massive construction activity over the last 4-5 years with inventory growing 10%-20%+ in a lot of markets. Even COVID only barely slowed the trend in 1H20 and the activity resumed in 2H20.

- A flood of new capital driven by flight to safety from underperforming sectors (office, hospitality), as well as new capital from other areas (e.g. stock market is at the all-time high, but the future is uncertain).

- Big boys are coming to the sector - case in point, Blackstone acquisition of Simply Self Storage.

- Downward pressure on the cap rates from the competing new capital, while, at the same time, new supply applying downward pressure on rents.

All of the above makes me wonder, is self storage industry in the late stage market cycle and the end is near (3-5 yrs)?