What’s Really Happening in European Self-Storage?

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It can be argued that personal storage began in England more than two centuries ago, when banking institutions were asked to safeguard valuables for customers traveling overseas. Soon bank vaults became overcrowded, and the lofts of moving companies were used for the overflow. By the middle of the 19th century, the first warehouse for household/personal items was built. Warehousing remained the main supplier of storage for more than 100 years.

While you may dispute this little piece of history, last year the Federation of European Self Storage Associations (FEDESSA) signed affiliation agreements with its colleague associations in the United States and Australasia. This was an important acknowledgement that self-storage in Europe (including the United Kingdom) was definitely “on the map.” So what’s happened to the industry in the past year?

The Role of FEDESSA

FEDESSA supports and provides advice to national associations in 13 European countries: Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Spain, Sweden, Switzerland, The Netherlands and The United Kingdom. The latest to join is the newly formed association of Ireland, which recently separated from its mentor, the Self Storage Association of the United Kingdom.

There is a firm commitment from Norway to launch its own association in the near future. Meanwhile, FEDESSA has built relationships with operators in Austria, Hungary, Latvia, Poland, Portugal, Romania and Russia. It will continue to encourage and assist each nation to set up its own organization once it has a sound base of operators and operational facilities. With its member associations, FEDESSA now represents the majority of players in the European market.

FEDESSA has made its mark, providing the European industry with a common voice and coordinated message to legislative bodies such as the European Commission, European Parliament and Council, as well as standardization bodies such as CEN and ISO. With the support of its communications company, Weber Shandwick, FEDESSA is able to follow regulatory developments, analyze their business impact and, where appropriate, influence policy outcomes so the expansion of the European industry continues under favorable conditions. It also provides a forum for the exchange of relevant national developments with possible cross-border implications.

Wherever possible, common values, policies, definitions, messages and guidelines are encouraged. In fact, FEDESSA is in the process of establishing a customer standard on self-storage services through CEN, the European Committee for Standardization. The process will take up to another year or so, but the intention is to look forward to the provision of a standard for the next eight to 10 years—quite a tall order in light of the current immaturity of the industry.

Size of the Industry

While overall statistics for the European self-storage industry are not readily available, a review made this past summer resulted in a conservative estimate of approximately 1,270 facilities. The breakdown of growth over the past 17 years is noted in Figure 1. (Note: The majority of these figures are only estimates.)

Continental Europe

As seen in Figure 1, the industry is continuing to expand throughout Europe. Of course, it takes time for the public to understand the product and then take to it. Nevertheless, the available rentable storage on Continental Europe has grown to 22.6 million square feet, only 2.4 million square feet less than the slightly more mature U.K. industry.

Self-storage was introduced to Norway at an early stage, in 1993. The lead was taken by Carl August Ameln and Lasse Høydal, who formed City Self-Storage. They sold the company in 2004, when it was already operating in Barcelona, Copenhagen, Oslo, Prague and Stockholm. City Self-Storage has continued to spread its wings and now has 37 facilities in Czech Republic, Denmark, Italy, Norway, Poland, Spain and Sweden.

Shurgard Europe remains the big player, with 149 facilities in six European countries—Belgium, Denmark, France, Germany, Sweden and The Netherlands—as well as 18 facilities in the United Kingdom. However, its attempt earlier this year to float itself on the Belgian stock market was aborted, at least for the time being, and one wonders what’s going to happen next. Shurgard was instrumental in the early growth of the industry in France, Sweden and The Netherlands, and it is still the major player in these countries. It also dominates in Belgium.

France and The Netherlands were previously the countries that had seen the largest self-storage development in Mainland Europe, but the most spectacular recent advancement has been in Spain. The Spanish organization, Asociación Española de Self Storage (AESS), has been influential in bringing its members together, having hosted a successful first conference in Barcelona in May 2007.

The various speakers for AESS agreed the industry’s main catalysts include the high population density of the large metropolitan areas and high real estate costs, variables that are reaching extreme levels in Spain. Operators were, however, warned against excessive optimism. For example, after initial years of strong growth in France, a slowdown period followed, and many operators disappeared in some kind of natural quality selection. Today, the French market is again expanding, heading toward solid penetration in time.

The United Kingdom has also seen periods of strong advancement followed by periods of consolidation. And there have been several indicators pointing toward a slowdown of the Spanish economy, which might frustrate the more ambitious business plans there.

Meanwhile, Italy has an overall lower population density, which may explain why the growth of its self-storage market, though significant, has not been as spectacular as in some other countries. The same is probably true for the Nordic countries, where development has been steady and often determined by the availability of suitable land and locations.

This leaves us with the central areas of Europe, particularly Germany, where growth has not been as dramatic as one might expect. Germany has the largest population of any country in Europe. Yet it can only muster a handful of facilities so far, and rumor has it that setting up and operating a facility in Germany remains difficult.

While it seems unlikely that the European market will ever reach the level of penetration achieved by U.S. operators, there is clearly significant growth potential. Even a level of penetration comparable to that achieved in the much less densely populated Australasia, or just a quarter of the U.S. penetration, would forecast an excess of 10,000 facilities in Europe in the coming years (based on an average store size of 40,000 to 50,000 square feet).

United Kingdom

The U.K. self-storage industry continues to grow apace—in terms of space available for rental—at 10 percent to 15 percent per year (estimated at 14 percent in the last year). There are still more facilities in the United Kingdom (680) than in the rest of Europe combined (590). The average rentable square footage per person is .42 as compared with more than 6.8 in the United States and 1.1 in Australasia. The U.K. industry now generates revenue of about £360M. A typical facility has an average size of approximately 38,500 rentable square feet.

There are now approximately 250 separate companies operating self-storage in the United Kingdom. However, almost 45 percent of the rentable space is in the hands of the larger operating companies: Safestore Self Storage (100), Access Self Storage (45), Big Yellow Self Storage (44), Lok’nStore Self Storage (21), Storage King (19), Shurgard Self Storage (18), Personal Storage (14), Space Maker Self Storage (10) and Keepsafe Self Storage (9).

Other operators are smaller and typically have fewer than nine facilities, often only one. On an annual basis, this independent element of the market is increasing significantly as new operators, some of which appear to have significant financial backing, enter the arena. Meanwhile, the larger companies have a number of facilities in the pipeline too.

While the main concentration of facilities is still in London and Southeast England, there are now sites in all the significant U.K. conurbations. This year alone, there has been a major increase in the number of facilities opening in Northern England. The main barriers to growth are the limited availability of first-class locations in London and Southeast England; finding financing for the business; and the time and effort required to obtain the necessary planning and environmental consents. Forecast growth, based on the same assumptions as for Continental Europe, would see between 1,700 and 2,600 facilities across the United Kingdom in the next few years.

Some of most interesting developments in the market this year have been the high-profile status changes. In the spring, Safestore was listed on the London Stock Exchange for the first time, and Big Yellow became the United Kingdom’s first—and so far only—self-storage real estate investment trust. In addition, HSBC, one of the largest banking and financial-services organizations in the world, acquired Scottish-based Armadillo, which is now being managed by Personal Storage.

The Australian financial institutions have also “arrived,” with a long-term management agreement between Macquarie Real Estate and Storage King announced this summer. Latterly Babcock & Brown, an Australian investment bank, acquired Space Maker, which was previously American-backed. Are we seeing an Australian takeover bid? Or perhaps of more significance, what has happened to U.S. support of the self-storage market in the United Kingdom or, for that matter, Europe?

The Future

There’s no doubt this is an exciting time to be in self-storage in Europe. Growth is clearly possible, and with it comes an increasing interest by the public in the product and legislators in the operational aspects of the business. FEDESSA and its member associations are ready to play a part. We look forward to seeing as many European operators as possible at our annual conference in Rome in May 2008. 

Rodney Walker is the secretary general for the Federation of European Self Storage Associations and the CEO of Self Storage Association Ltd. in Nantwich, Cheshire, England. For more information, visit www.fedessa.org

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