UK Self-Storage Industry Evolves and Expands Despite New Tax and Other Challenges

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By Rachel Adams

Self-storage was introduced to the United Kingdom in the early '90s. Since then, the industry has faced an array of challenges, with the latest being the imposition of a 20 percent value-added tax (VAT) as part of the government’s revised budget plan in 2012. Despite the obstacles, U.K. self-storage has continued to propel forward, evolving to fit the changing needs of consumers and expanding into new markets.

Conquering the VAT Curveball

Coming into 2013, the VAT was one of the biggest challenges on the horizon for U.K. self-storage operators. Starting Oct. 1, 2012, self-storage was no longer exempt from having to charge customers a sales tax.

According to a survey conducted by the Self Storage Association of the United Kingdom (SSA-UK), many facilities chose to shield consumers from the price increase by phasing in the tax. As a result, average net rentals declined only 5 percent in 2012. 

"The VAT rise affected most of our operators and made self-storage a more expensive product for the customer. However, our members are confident that sales and profit can be maintained, with 79 percent of surveyed firms expecting profit to be the same or improve this year,” said Association CEO Rodney Walker in the survey report. “The effect of the VAT increase has yet to be fully measured, but with average occupancy only falling 2 percent over the year, members are confident of reversing this over the coming year."

Evolving to Fit Business, Consumer Needs

As the needs of consumers have changed, the U.K. self-storage industry has evolved to meet new requirements. As the result of recession, more business users have turned to storage to mitigate their overhead. Many facilities began to offer more business-related services, including office space, phone-answering services, P.O. boxes, IP telephony and even shipping services.

According to the SSA-UK survey, the average length of stay for all customers increased from 37 weeks in 2012 to 41 weeks in 2013. "An increased proportion of business users during the recession is one reason average storage time has increased, since business users typically store for much longer than private individuals," said David Greenwoood, CEO of Boxload, a U.K. company that provides mail-storage solutions for personal and business users.

A need for office space is another driver. Access Self Storage, which operates more than 50 facilities in the United Kingdom, reported twice the volume of inquires for office space in the last few years. "In many cases, business owners are skeptical about setting up physical or even virtual offices in storage facilities," says Kevin Pratt, marketing manager. "They think they will find themselves in one of our metal-lined, windowless lockers." On the contrary, the company offers a range of units with heating  and lighting that are available for any length of time, he says.

In addition, self-storage is becoming a more widely known and accepted part of the culture. Facilities are getting creative, catering to the unique needs of the market. For example, LoveSpace Self Storage began offering a service not commonly seen in the United States, one that allows for the storage of goods without renting an actual unit. Called "mail storage" because the goods are delivered to the facility via post, the service allows tenants to pay for storage by the box.

The U.K. industry is holding steady across the board with plans for growth. According to the SSA-UK survey, 81 percent of self-storage companies are planning to open a new facility this year, and 11 percent have definite plans. "Things don’t look likely to slow," Greenwood says. "With the U.K.’s population expected to keep increasing and space for new construction reducing, 2013 looks like it will be a good year for self-storage operators in the U.K."

Rachel Adams graduated from the Walter Cronkite School of Journalism and Mass Communication at Arizona State University with a bachelor's degree in journalism and a minor in Spanish. Her passion for writing and culture propelled her journey through college and has continued to inspire her endeavors with VIRGO Publishing, where she contributes to "Inside Self-Storage.” Contact her with questions, comments or ideas at radams@vpico.com.

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