Spain's Growing Need for Self-Storage
|Copyright 2014 by Virgo Publishing.|
|By: Bridget Nemeth|
|Posted on: 12/01/2003|
Since 2000, Spain has been experiencing a tide of immigrants leaving Northern Europe and the United Kingdom like no other time in its history. Nicknamed EUmigres, they are drawn by the warm climate and easy lifestyle of Spain. But finding housing has become a concise science, and new arrivals hunt living accommodation in an ever-decreasing precious commodity—urban land.
The average living space for any family of four is 100 square meters, all modern appliances included. Any remaining ancillary and recreational items are packed on terraces to be retrieved when needed. The vast majority of people are in dire need for additional space, and it’s easy to see self-storage is a beneficial service.
The entrepreneurial spirit and pioneering vision of a few companies have been working hard at creating, promoting and providing awareness of a valuable resource—storage space. There are close to a dozen facilities throughout the Spanish peninsula in Barcelona, Madrid and Malaga. These numbers are not insignificant. The industry first began to take shape less than a decade ago, and the speed at which additional sites are expanding is commendable. Being late bloomers in the industry provides certain advantages in knowledge and offerings, but also a number of challenges to overcome.
Self-storage is considered an industrial business; therefore, zoning restrictions are an issue. To accommodate the increasing need for housing developments in recent years, industrial zones have been reclassified for residential and commercial use. This pushes industrial zones to the outskirts of the cities.
Nikolas Soskin, general manager, and Serge Kaouane, country manager for Spain of Easybox Self Storage; and Eduardo García Bardón, manager of Greinnsa Mini-Almacenes, agree a site must be no more than a 20-minute drive from any point in the city limits. This has the industry in a race to obtain the right building or location in the current industrial areas.
Planning, Developing and Constructing
Generally, a facility is developed and completed in phases, using the revenue obtained from current rentals to complete the remaining floors or units. The lack of knowledge the municipalities have for this industry can make the process more difficult.
Kaouane believes it’s a matter of addressing the business plan in terms the authorities can understand. Construction regulations and codes may have to be reevaluated to comply with local municipal laws. Understanding the laws and regulations and working with people familiar with self-storage projects leads to a timely inauguration.
Financing is a make or break deal. Spanish banking institutions do not understand the nuances of the industry or the potential profitability storage can provide. Banks are cautious about lending the funds needed to complete a facility. However, due to a common currency and the United Kingdom breaking ground in this arena, it is possible to obtain financing from British banking institutions.
Soskin has been able to obtain financing for sites in Spain and Italy via this method. This, however, is not the only source of funding—personal, other equities and investors may be needed to finance this type of venture. Bardon states if there is some type of collateral, such as a structure for conversion, financing construction is easier. Typically, though, personal equity and other investors may be needed to finance this type of venture.
Getting the Word Out
Although the Spanish public has little knowledge of the benefits of self-storage, the new immigrants, particularly those from the United Kingdom, bring awareness of it from their own countries. Marketing efforts can take up the majority of budgets. Some people who need storage will shop around for the typical container- storage system. While researching, they run across self-storage facilities and discover the advantages, location and cost.
Word-of-mouth tends to be the most typical way people learn about self-storage. The Yellow Pages, local phone guides, web pages, direct mail pieces, building signage and location are other methods employed to promote and educate the public.
Who’s Here Now
There are a number of facilities currently operating in Spain—Easybox and Greinnsa are just two. Each has been successful in introducing this new concept to the public and business community. Via climbing occupancy and increasing exposure, these organizations are the innovators of what will become a household word in the coming years. Although they have taken a different approach in providing self-storage, they share the basic concepts of providing additional usable space.
Easybox is a group with more than 20 years of European self-storage experience. It owns and operates two sites in Spain—Barcelona and Madrid—and three in Italy. The site in Madrid is a conversion. The location in Barcelona is a new, third-generation building with high visibility from the highways leading into the city from the airport and beach resorts. This location can be reached by a 15-minute drive from any point of the city. Although developing third-generation buildings can be more costly, Soskin believes they are the best structures, as they are built according to an organization’s plans. At the same time, adapting an existing structure can be more challenging.
The Barcelona facility is a four-story, 2,000- square-meter building. It offers round-the-clock access, video surveillance and security-code access, an on-site property manager, insurance, ancillary supplies, and plenty of parking space for loading and unloading. Easybox is renting space while phasing and completing the remaining levels. Within six months, the company has filled approximately 140 of the 250 available units—60 percent individual and 40 percent bulk occupancy.
A significant amount of time and money has been spent to educate the public and promote self-storage. The company uses its site as the primary marketing vehicle. Kaouane uses the building’s top-floor window to display mannequins moving into a unit. The Yellow Pages, a website, the local phone guide and an intensive, customer-training program are the company’s other promotional methods. Right on track to deem its project a complete success, Easybox believes it will take up to three years fill its 550-unit center.
While researching a use for a portion of a warehouse, Bardón stumbled across self-storage about six years ago. Having grasped the concept and understanding the need for self-storage, his company quickly converted the warehouse into storage units. The success of these units prompted the company to turn the rest of the warehouse into a formal self-storage site.
The facility, located in a 30-year-old industrial park and off the major freeway circumventing Madrid, can be accessed from any point of the city in 10 minutes. The site’s established entity in the metropolis means locating the building is easy, despite the industrial park forbidding signage on the exterior of the building.
The 3,000-square-meter facility offers tenants a variety of unit sizes, forklifts for easy transport to individual units, 24-hour security— an after-hours alarm system is activated when the center closes—and personal keys to access units during business hours. Boxes, bubblewrap, packing tape and shelving are available for purchase.
Educating the public on self-storage is also the facility’s largest expense. The Yellow Pages, direct mail and a local magazine are used to promote availability. Greinnsa boasts 100 percent occupancy, which has led to the opening of another site in Alcobendas, the northeast corridor of the city.
Greinnsa plans additional facilities, concentrating its efforts on the cities with the highest population. According to Soskin, Easybox has plans to open an additional 10 sites this year.
Self-storage entrepreneurs have invested a great deal into developing this industry in Spain and are reinventing a service that, in the past, has been difficult, timely and expensive. Some conventional storage companies place containers in open lots. As Easybox’s slogan states, what better place to store items than in a “clean, dry and secure” area? Bardón hopes one day anyone needing his storage will know all they have to do is call Greinssa to “alquilar una habitación,” rent a room, as people acquaint themselves with self-storage.