By Brett Saladin | Goldmark Commercial Real Estate | Agent
A Lucrative Investment Opportunity Worth Your Attention
Self storage may not headline the commercial real estate news cycle, but investors overlooking it might be missing out on one of the market’s most resilient and profitable sectors. Across the country and here in the Fargo Moorhead region, demand for storage space is surging, fueled by population growth, changing lifestyle patterns, and e-commerce dynamics.
A Market on the Move
The Fargo Moorhead metropolitan area is booming. As of mid 2024, the metro population reached approximately 267,800, a 7 percent increase since 2020 and a 28 percent jump from 2010. In projections, the area could grow nearly 50 percent by 2045, reaching more than 330,000 residents. This influx of new residents fuels demand not just for housing, but for space to store household goods, business inventory, or personal belongings, especially during transitions like downsizing or moving.
Strong Demand and Stable Fundamentals
National trends mirror this local growth. Self storage facilities have consistently maintained remarkable occupancy levels, typically between 94 percent and 96 percent, giving owners pricing power and supporting healthy income growth. Over the past five years, average rents nationally increased by 5.8 percent annually and spiked 17.4 percent in 2021 alone. In the metro, we have seen inventory of self storage assets grow substantially as well, with almost 1 million SF of storage space being added in the past 10 years for a total of 2.9M SF as of mid-2025.
Attractive Investor Metrics
Self storage investments deliver impressive returns. Over the past 25 years, self storage REITs outperformed all other real estate sectors with an average annual return of 17.4 percent, versus 10 to 12 percent for industrial, retail, office, and residential sectors. Cap rates for Class A self storage facilities in strong markets have averaged around 5 to 6 percent, offering solid yield in today’s market. As of early 2025, achieving a cash on cash return of 8 to 12 percent is considered favorable.
Lower Complexity and Lower Risk
Self storage requires less overhead than commercial leasing. There are no lengthy tenant fit outs, no high maintenance needs, and leases are straightforward. This simplicity means fewer headaches and more predictable operating costs, a big plus for investors in the Fargo Moorhead Metro.
Risks to Watch
Location remains critical. Even in a growing market, saturation can impact rental rates. Moreover, development costs and interest rates have pushed cap rates higher recently, moderating but not erasing returns.
Why This Matters for Fargo Moorhead Investors
Population growth: With nearly 400 new residents monthly, Fargo Moorhead is one of the fastest growing metros in the Upper Midwest.
Stable demand: Renters, students, families, and businesses all create persistent demand for storage.
Resilient performance: Even in economic downturns, self storage holds up better than retail or office assets.
Financial performance: Attractive cap rates, steady cash flow, and low maintenance make it compelling, especially compared with more complex property types.
Final Takeaway
Self storage offers investors in the Fargo Moorhead metro a recession resistant, high demand asset class with stable returns and manageable risk. With steady population growth, resilient fundamentals, and strong cap and cash on cash returns, it deserves a spot on any savvy investor’s radar.
If you would like to explore specific neighborhoods or analyze potential cap rates and returns for a self-storage project in the area, I would be happy to help break down the numbers and evaluate opportunities tailored to Fargo Moorhead’s market.