Self-storage crossed overseas from the United States to the United Kingdom way back in the mid-'80s. So why, you ask, has it taken so long to catch on? And surely it cannot be such a great opportunity if it's taken nearly 20 years to get to just 400 centers in the United Kingdom and a total of about 750 centers in the whole of Europe.
We all know customer awareness of any product is essential to create market demand, and this is still the biggest obstacle to self-storage success throughout Europe. However, the reason it has taken so long for the market to get where it is today has nothing to do with lack of opportunity or acceptance by the Europeans.
Quite simply, the early entrepreneurs of U.K. self-storage capitalized on the lack of awareness of this cash-generative business by keeping it a closely guarded secret. Based on some of the historic fill rates, it was kept secret from potential customers as well. With the exception of a few Yellow Pages advertisements, the self-storage cards were kept very close to someone's chest, indeed.
"Whatever you do, don't tell anyone in the business world about how fantastic this simple concept is! Don't let anyone know how they can make huge returns on their existing carbuncle of an old building they don't know what to do with!" These words must have echoed down the corridors of power.
So there you have it—growth was restricted to a handful of operators who spent close to 15 years making money from big, old, multistory, industrial buildings in back-street locations. Unless you were moving or desperate for short-term business space and went looking for it, you never used or even got to hear about self-storage. That's why growth was restricted to less than 150 self-storage buildings in the first 15 years or so.
It wasn't all "mom and pop" operations, either. Some big players emerged from this fledgling marketplace, namely Abacus, Abbey and Acorn. Some big money changed hands as well, with about £30 million ($44 million) or so being the biggest deal, if my memory serves correctly. Abacus and Acorn are now merged to create Access Storage Solutions, and Abbey is now owned by Mentmore Abbey plc. The pair has about 100 facilities between them.
I personally stumbled across self-storage when my business happened to receive a referral from a lift-manufacturing company for a mezzanine-platform floor about five years ago. (That reminds me, I never did buy Mike Carp of LTR Lifts that beer I promised him.) So it is my personal thanks, and not criticism, I give to the first-generation entrepreneurs. If it weren't for those guys, I wouldn't have happened across self-storage just when it was about to take off.
Just as my company joined the Self Storage Association of the United Kingdom and Europe, Larry Lipman, a well-known, top-drawer entrepreneur and spin doctor, spotted the self-storage opportunity through his property-dealing company and formed Safestore plc. This brought the concept to the forefront of not only the city money men's minds, but the whole of the property world.
I use the term "spin doctor" tongue-in-cheek, as Lipman is a man of action, not words. I'm referring to his proven track record of spinning out new ventures from his main trading vehicle, Safeland plc. Before Safestore, there was Hercules plc, which became the Alternative Investment Market stock of the year. So it was Lipman who proved to be the catalyst that turned the best-kept secret into one of the most enticing property plays in the United Kingdom.
So when you decide to form an opinion on the European self-storage marketplace, don't judge it on its first 15 years of performance. Judge it by the last five years, during which the number of facilities has grown from 150 to 750, with a more than 30 percent annual growth predicted by educated pundits. You don't need to be a brain surgeon, or even an entrepreneur, to recognize this opportunity!
Andrew Donaldson is the chief executive and founder for Active Supply & Design (CDM) Ltd. of Cheshire, United Kingdom. He is also the founder of The Self Storage Sentinel newsletter, Rent-A-Space Ltd. (now a multi-site operator) and selfstorage.uk. net. For more information, e-mail [email protected]; visit www.activesd.co.uk.