Empty UK Farm Buildings May Be Ripe for Self-Storage Conversions
By Roger Moore
Hundreds of former farm buildings currently lay empty all over the United Kingdom, sadly considered too small for modern, large, agricultural machinery and equipment. With the government set to allow barn conversions to become easier, now is a good time to consider converting former farm buildings to self-storage facilities.
Britain’s economy is starting to enjoy positive growth again, with wages recently overtaking inflation and the housing market booming. Consumer spending looks like it will continue to rise, and with more people moving houses, prospects for growth in self-storage continue to remain highly positive.
Opening a self-storage facility typically requires a great deal of upfront investment (£50,000 to £100,000) to fit a 2,000-square-foot facility, including a mezzanine, before any customers can begin storing. Owner-occupied farms often have the advantage of being able to draw investment from their existing capital base, but owners should ensure that any tax relief available to the farm isn’t jeopardized by the new business. The outside growing area remains the same, so the producing output of the farm isn’t impacted.
The average net return from U.K. self-storage is £19.96 per square foot, making it an attractive revenue compared to even the best building lets. This means just 2,000 square feet of barn space can generate an annual turnover of up to £80,000, with a first-floor mezzanine installed. More than 60 percent of the U.K. storage industry is run by small operators. According to the Self Storage Association of the United Kingdom, 11 percent of self-storage firms in 2013 said they had definite plans to expand. Meanwhile, as of 2010, just 24 percent of U.K. farms were already implementing diversified activity, according to the Department for Environment, Food and Rural Affairs (DEFRA), demonstrating a healthy potential for new business start-ups.
While the majority of storage facilities outside U.K. cities have been built near a major road or junction, there’s been an increasing emphasis on self-storage customers preferring countryside locations to industrial estates. Birds singing with trees and hedgerow blooming amongst all the open space outside of a self-storage facility represents a far more attractive place than a grimy and overcrowded business or industrial park.
Many traditional farm buildings were built with pitched roofs, making it difficult to maximize the building’s space. Customers storing boxes and smaller goods are often more than happy to take a room with a pitched side and pay a reduced price.
Once self-storage facilities have been installed and opened for business, the majority of the hard work and investment is over. Locations near high-density populations, with few competitors, can often result in ready-made demand. Facilities and storage units are only lit when a customer is inside them. With low labor cost and overhead compared to most other businesses per unit area, self-storage businesses can become sustainable faster, and with minimal management input.
Starting a self-storage business on your own can be daunting, so a franchise model or consultancy should be considered. Typically, franchises charge the equivalent of 10 percent of turnover but provide all the marketing, branding, promotions, systems and documental support. Further training support for diversifying farm businesses is currently available through DEFRA for funded courses, including business management, information and communications technology, and marketing.
Roger Moore is owner and director of Morespace Storage, a self-storage facility operating in converted buildings on the site of a former arable farm in Cambridgeshire, England. He also is a consultant with Rural Renaissance, specializing in farm diversification and business start-ups. He was educated at the University of Reading and holds agricultural banking and trading experience.
- Self-Storage REIT CubeSmart Buys Storage Deluxe Facility in Coney Island, NY, for $49M
- Extra Space Self-Storage Development Opposed in Lisle Township, IL
- Recipe for Success: Packaging Your Self-Storage Loan Request
- Sovran Self Storage Announces $398M in Property Acquisitions
- Dahn America360 Buys My Attic Self Storage in Tomball, TX, for $11.2M