March 1, 2006

3 Min Read
Storage in The Netherlands

The Dutch self-storage market is about eight years old and steadily growing. Most of the country’s 80 active facilities are successful, with big players such as Shurgard (30 stores), Citybox (10), Allafe (5), Extrabox (3), Kubus (3), SafeStorage (3) and Devon Self Storage (2), as well as a handful of small, independent companies. Surprisingly, the larger players are not the ones opening new sites—it’s the solo entrepreneurs driving growth.

Shurgard seems to have shifted its focus to other countries; but one of the great things about having an established and respected company lead the market is it sets the standard for quality. As a result, Dutch customers can expect facilities that are clean and well-constructed.

A popular industry trend includes individuals who offer temporary storage on limited acreage or in farm sheds. They mostly advertise through eBay and other marketplace websites. There remains a difference, however, between a random garage-style building and a real “storage hotel” like the ones provided by Shurgard or Extrabox. Eventually, customers will experience this for themselves and begin to demand high-quality storage.

Limits to Growth

Many real estate owners are exploring the storage market, but they still prefer to land a single tenant with a five- to 10-year lease instead of 500 short-term rentals. Financiers sometimes regard the storage business as labor-intensive compared to other investment options. For example, a facility may have two or three employees and 400 units, with renters constantly coming and going. Most investors prefer to avoid businesses that involve intense customer service and its related issues. Management companies could rectify this challenge, but unlike the United States, the Netherlands doesn’t have many with self-storage experience from which to choose. As the market grows, more options should become available, which will encourage a cycle of greater investment.

Another factor limiting growth is difficulty in securing financing. Many entrepreneurs wishing to enter the business discover few institutions are willing to lend them the money to do so.

Finally, the Dutch market is undeniably expanding, but not all of its 80 facilities are succeeding as hoped. They face common challenges such as public ignorance or a poor perception of the product, bad locations, and unforeseen competition in big cities such Amsterdam, Rotterdam, The Hague and Utrecht.

Elusive Profit

Although the demand and need for storage exist, Dutch companies and entrepreneurs are finding customers don’t just walk in and pay the quoted rates. It takes hard work to turn a profit. It’s not enough to lease or buy a building with cheap rent and create arbitrary unit configurations; nor is it sufficient to put just anybody behind the desk.

To generate generous returns, facility owners must rely on solid planning and research about each building and location. They also need to conduct marketing, perform daily sales activities, keep facilities clean, and hire trained and caring staff. This is what many newcomers don’t understand.

Today’s consumers are savvier than ever. They don’t just want high-quality service with no hassles, they want low prices. A facility’s entire business process has to run smoothly—it takes more than a chic corporate image to succeed. A smart owner can create his own market by being proactive. Just like anything worth pursuing in life, self-storage requires effort.

Erwin Fleer is co-founder and a board member of Extrabox Self- Storage, based in the Netherlands. The company is the first in Europe to offer a complete franchise opportunity. For more information, e-mail [email protected]; visit www.extrabox.nl.

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