By Philippe Peyrot
France is one of the most dynamic self-storage markets in Europe. While most facility development stopped in England from 2009 to 2013, it kept growing in France at a rate of 15 percent annually. It’s a young industry that really began in the late 1990s with the arrival of Shurgard Self-Storage. During its initial years, the market was developed by large operators who built big stores averaging 40,000 net rentable square feet.
Around 2006, two phenomena occurred. First, several large self-storage operators merged. Second, more small entrepreneurs looked into the business and began to convert buildings that had an average of 10,000 net rentable square feet.
Today, there are 437 storage facilities in France comprising 9.2 million square feet of space and 139,000 units. The four largest companies own 45 percent of the facilities, with 68 percent of the rentable square feet developed.
The Franchisee Model
Most recently, a new type of storage business has emerged: the franchise. Twenty percent of the facilities in France are franchisees, and six companies now offer a franchise to novice entrepreneurs. They mainly attract people who already have a business and floor space and want to create a second source of income with 5,000 to 10,000 net rentable square feet of self-storage. They’re usually logisticians, movers or merchants.
Another type of franchise is one in which someone with an empty building decided to create his job and a revenue stream to pay the land tax. Few of these franchisees enter the business without already owning or renting a building. However, the vast majority of these conversion stores are in poor locations.
For my self-storage operation, Annexx, which operates 15 facilities in France, the answer to this new competition is to provide customers with the cleanest, most attractive and secure facilities. Every unit has an alarm, and all properties feature an onsite manager. Our facilities are on high-traffic, high-visibility roads. Our staff is friendly, and we train them year-round.
Challenges to Growth
At Annexx, we can’t say we’ve had to suffer from the slow economy. Rather, it’s been balanced by the growth of awareness in self-storage. In the last six years, we grew 15 to 20 percent annually.
Self-storage developers in France, Annexx included, face a number of challenges to opening new stores. Finding the right piece of land for new construction takes time. We’re in contact with hundreds of land owners, so we’re there when they’re ready to sell. It took us eight to 10 years to close the deal on two of our new stores, which will open in the coming months. They were worth the wait because they’re in perfect locations.
Our biggest challenge is everything is slow—slow economy, slow increase in product awareness, slow decision-making from lenders. But it’s also our chance as a small company to have a smooth development in front of deep-pocket operators. Because, as we say in France, “You can’t go faster than the music.”
Today, only 20 percent of the French outside of Paris are aware of the self-storage service. No amount of marketing money has been able to increase this awareness. U.S. companies didn’t meet their expectations in France and lost a lot of money. As a result, Shurgard hasn’t built anything in the country in the last six years.
About 75 percent of our customer contacts come from the Internet, a figure way above U.S. standards. Google has a 90 percent market share in search engines in France. Google AdWords is a great way to get leads, but the investment increases every year.
As the storage industry in France continues to mature, Annexx will grow along with it. The company is no longer considered just a “southwest of France” self-storage operator. We’ve left Bordeaux and Toulouse and opened stores in Lyon, Marseille, Montpellier and Nantes. Our plan is to become a true national operator with facilities in all of the largest French cities, including Paris.
Philippe Peyrot is president of Annexx, which operates 15 self-storage facilities in France. The company was founded in 2002 in Toulouse, France, by three entrepreneurs with extensive experience in construction, management and real estate. For more information, visit www.annexx.com.