Potential

R.K. Kliebenstein Comments
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Paris, France

By R.K. Kliebenstein

I recently returned from the annual conference and tradeshow of the Self Storage Association of the United Kingdom and Europe, held in Brussels, Belgium. While on the east side of the "big pond," I met with clients in France to learn more about the self-storage market in Paris. I'd like to thank Isabelle White of Shurgard and Peter Measures for their significant contributions to this market profile. Without their input, this article could not have been written.

In a word, wow! For anyone who has been there, Paris certainly brings opportunity to mind when it comes to self-storage. Peter Measures, a consultant turning developer, helped me put into focus the elements that best define the self-storage market in Paris and France in general:

Potential

  • There are approximately 50 self-storage sites open or under development in France to accommodate a total population of 58 million.
  • In Paris, approxiately 35 sites are currently open or in development to serve the city's population of 11 million.
  • Many cities of 200,000 population and some of 600,000 population have no self-storage sites.
  • While it is true that French people are less mobile than their American counterparts, this is changing. (For example, on the radio this morning it was reported that in the 3rd arrondissement [district] of Paris, 70 percent of the voters have moved during the last decade.)

In any event, if the potential for self- storage is even only one-third the capacity of that in the United States, there is room for 440 sites in the Paris area (Chart 1). How is that for opportunity?

Chart 1

Region/Country Population Number of Facilities Population per Facility
United States 260,000,000 30,000 8,700
United Kingdom 58,000,000 300 193,000
France 58,000,000 50 1,160,000
Other Western Europe 254,000,000 30 8,450,000

The Players

The French Self Storage Association currently has four members and was able to share the information in Chart 2:

Chart 2

Number of Stores Percent Stores Square Meters Square Feet Percent Feet Number Spaces Percent of Spaces
Shurgard 14 38% 71,000 764,238 50% 10,000 48%
Access 13 35% 45,000 484,375 32% 6,000 30%
Une Piece en Plus 6 16% 13,000 139,930 9% 2,500 12%
Homebox 4 11% 13,000 139,930 9% 2,100 10%

Isabelle White was able to share how Shurgard is faring in Paris. "Shurgard is currently the largest self-storage operator and developer in France, with 16 stores (mostly in and around Paris) that represent approximately 80,000 square meters of net-rentable space. Shurgard began operating in France in 1997. Since then, we have developed a fully integrated development and operating team. Based upon our experience and success to date, we have gained a lot of confidence in the French market and plan to continue to aggressively grow our presence here."

Access, which is one of the market leaders in the United Kingdom and Europe, is owned by Security Capital of Chicago, through which it is reported to have ties to Storage USA. Access has five sites in Paris, and seven in suburbs close to the city (Nanterre, La Defense, Gennevilliers, St. Denis, Montreuil, Charenton and Gentilly). The company is planning more sites in France this year and as many as eight in 2002 (not all of which may be in Paris). Some of these sites are leasehold interests, which is a common European occurrence--especially in central Paris.

Une Piece en Plus was developed by private French property developers, and the group was taken over in September 2000 by Mentmore Abbey, a self-storage operator from the United Kingdom. In the last three years, the company has created four sites in or very near Paris, two of which are approaching maturity. Two other sites, slightly farther from the city, are under development. It is expected that after the recent purchase by Mentmore Abbey, there will shortly be more stores underway.

Homebox is the last of the players and, in Paris, is similar in size to Une Piece en Plus. Homebox has been in the self-storage business for less than five years. It tested the market in Paris with three sites on leased premises and has since built a chain of some 10 sites. The Rousselet family has essentially financed the growth with equity. I understand they are soliciting a U.S. financier to roll out nearly 50 sites in a Europe-wide expansion. At the present time, the company's sites are all in France.

An American Perspective

While in France, I visited all the players except Access. What I saw was a typical self-storage product mix. The Shurgard property looked like any other Shurgard-built store in the United States. It was a large conversion building with halls and walls from a U.S. supplier. The store was not significantly different from its major competitor, Homebox, located just across the expressway.

The Homebox office was more difficult to find as they were located in a building with many other offices. The route to enter the property was rather circuitous and, once inside, it would have been difficult to tell it was a self-storage property had the loading door not been open.

Une Piece en Plus was located in what looked to be a converted parking garage, more in the heart of central Paris (the old part). The store was more of a first- generation facility, typical of an older U.S. conversion. Signage was difficult to find at best, and I am assuming its success was based on the neighborhood knowledge of where it was.

All three stores' managers were very cordial, and all spoke as much English as I speak French, so I was glad to have a couple "locals" along with me. Growth in this market seems to be constrained by a lack of access to capital. At the time of this writing, I am attempting to find U.S. capital (equity and/or debt) for a French operator. It has been interesting to speak with U.S. capital sources about Paris, and their reluctance to even discuss capital infusion into Europe. I am working hard to better educate some U.S. sources as to the tremendous opportunity that exists in Europe, but most are nervous about the long lease-up time (it takes approximately 48 to 60 months to reach stabilized occupancy), and the fact that site selection does not rely on competitive markers (there are so few) as much as the availability of sites.

The ratios of business customers to residential users is just about opposite than that of a typical U.S. storage facility, with as many as 70 percent commercial users. I am glad to be home, and want to leave you with just one thought: The opportunity to get in on the ground floor of an industry is immense in Paris, but it would be a difficult (if not impossible) task without a Parisian partner.

R.K. Kliebenstein owns and operates Coast-To-Coast Storage, which is in the process of evaluating a European partnership in an endeavor to open an affiliate office in the United Kingdom. Coast-To-Coast Storage has clients from Mexico, France and other European countries who are seeking U.S. capital partners. For more information, call 561.367.9241.

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