After 15 years of expansion, the French market is still in its infancy. There are 118 storage facilities serving the country’s population of 62 million. Compare these figures with those of the United Kingdom, which has about the same population and more than 400 facilities. Though the potential seems huge, France has already encountered temporary oversupply in markets like Lyon, its second-largest city.

Growth is steady but undeniably slow. Every day, we see evidence of mounting public awareness; yet studies show that where facilities are open, only 5 percent of the population knows what self-storage is. The classic Catch-22 applies in France: We need more facilities to promote self-storage, but more facilities can mean oversupply and slow rent-up.

The years 2000 to 2002 saw strong expansion mainly fuelled by U.K./U.S. companies. But growth slowed in 2003 and 2004 after most of the largest corporations stopped development. Some are only adjusting their expansion plans, but others are paying a steep price for common mistakes: choosing the wrong location; copying the U.S. self-storage model too closely; developing a business plan based on U.S. ratios and figures; opening or buying facilities just to fulfill promises made to investors; opening facilities to grab fees from investors; or all of the above.

Lots of entrepreneurs are interested in developing self-storage in France, but for every dozen projects on the drawing board, only one comes to fruition. Most new entrants have difficulty finding sites, insurance and, most of all, financing. Obviously, the financial institutions need to accept the industry.

The lack of access to capital has contributed to a situation in which the majority of established facilities are in the hands of large, publicly traded companies. This is just the opposite of the United States, where independents own most of the sites. As self-storage gains wider acceptance from financial communities, the trend should shift. This year, for the first time in the short history of France self-storage, French companies have opened more new facilities than U.K./U.S. ones.

Today, the United Kingdom is still five years ahead of France in self-storage development. When you look at how the U.K. market evolved, you can be reasonably optimistic about the future of the French market. This year, three positive presentations of self-storage have appeared on TV news in prime time. This is a clear sign that the concept is gaining momentum.

There are 31 self-storage companies in France. However, 64 percent of the market is controlled by only three corporations: Homebox, Shurgard and Une Piéce en Plus. The market is also geographically concentrated, with 54 percent of facilities in the Paris area.

Introducing the Old Players

Access. Current-day Access, wholly owned by Security Capital Realty, was formed in 1998 when it merged with Acorn, Abacus and Abri- Stock. Because its 17 facilities came from four different companies, site quality and design vary. When GE Capital acquired Security Capital Realty in 2001, Access France was in a wait-and-see mode. In April 2005, Une Piéce en Plus bought all its French facilities for an undisclosed amount.

Devon Self Storage. Devon’s three facilities are in Lyon, Marseille and Toulouse. The company’s expansion has ceased, and its sites are managed by Archon, a subsidiary of Goldman Sachs.

Homebox. Homebox has 15 facilities throughout France’s largest cities. Its owners, the Rousselet family, essentially financed the company’s growth with equity. Homebox hasn’t opened any new facilities in the past two years and doesn’t plan to expand in the future. The company is going through some heavy change. It hopes to reduce its operating costs and reach a breakeven point this year.

Shurgard. Shurgard boasts 36 facilities in France, making it the largest operator in the country. It develops well-located, expensive sites. Though it had early plans to build 20 sites annually, the trend has been about five. This is due to difficulties in finding ideal locations and getting building authorization. Shurgard spends an average of 200,000 in marketing when it opens a new facility, improving awareness of self-storage and benefiting the industry as a whole. Due to high construction costs, a large staff, and fees paid to Shurgard Europe, its breakeven point is the highest in the industry.

Une Piéce en Plus. Une Piéce en Plus (UPP) was created by private property developers who focus their expansion in Paris. Now the second-largest operator in France, UPP owns 20 facilities in the Paris area, three in Lyon and one in Nice. It also manages seven leasehold facilities, plus the 17 Access stores.

The company’s ownership has been erratic. First, it was taken over by Mentmore Abbey, a U.K. self-storage operator, which was subsequently purchased by Safestore, another U.K. company, in a cash deal worth 209 million. Safestore was then bought by Bridgepoint, a private-equity firm, in August 2004. The new owner had development plans for UPP that triggered the deal with Access and the construction of two new facilities in Paris this year.

New Entrants

Annexx SAS. Annexx was created two years ago by three Toulouse entrepreneurs with heavy experience in real estate and construction. The team planned to develop self-storage in the southwest of France. They own three facilities in Toulouse, and have bought three lots with full authorization to construct third-generation facilities in the coming year.

BoxAvenue. BoxAvenue, which builds only conversions, has three Paris sites. The company was joined by a large French investor three years ago, which allowed it to expand to nine sites across France.

Time to Grow

France has a huge potential market for self-storage. Even if it only grows to one-third the size of the U.S. market, another 2,400 facilities could be built in the next 15 years. The business will not blossom quickly, as it will take time for the level of product awareness to build.

In the meantime, storage companies will have to adapt their cost structure to survive and expand. Urbanism is a challenge in France, and prime locations are scarce. But one day, those who leaped into the marketplace will reap rich profits, while those who hesitated will be stuck with third-rate sites.

Philippe Peyrot is president of Annexx SAS, a self-storage company based in South France, and founder of Self-Stockage.info, an online magazine focusing on self-storage in Europe. For more information, visit www.annexx.com.