A handful of valet-style, self-storage startups have begun operating in the London market, attracting investment from venture-capital and crowdfunding sources. Using an online platform, companies like Boxman, LoveSpace, SpaceWays and WeStore Boxes Ltd. offer pickup, delivery and bin-storage services targeted at customers who require small amounts of storage and prefer to pay by the box, rather than for a set amount of space.
The start-ups believe they can disrupt the traditional self-storage market by offering lower prices and greater convenience to customers, as well as operate on tighter margins than larger storage operators, according to the source. “Rather than starting with a £50 to £60 [per month] minimum for a small cupboard, you can start from £4.95 for a box with us,” said Steve Folwell, managing director of LoveSpace.
While valet self-storage services typically include pickup and delivery of items, customer belongings are generally kept in an unidentified secure warehouse, and retrieval usually requires a fee and advanced notice. Some traditional self-storage operators argue this is less convenient than renting a private storage unit with direct access up to seven days per week. “People want to be able to pop in and get what they need,” James Gibson, chief executive officer of Big Yellow Group PLC, told the source. “Our proposition is: You have access seven days a week from 5 a.m. to 11 p.m., and it’s your own private, secure room, and there are about 20 different sizes.”
Big Yellow Group operates 78 self-storage locations in the United Kingdom under the Big Yellow Self Storage and Armadillo Self Storage brand names, with most concentrated in Greater London. Its total portfolio comprises 4.9 million square feet.
Where valet self-storage businesses may have an advantage in the marketplace is ease of entry, since they operate using virtual storefronts on the Web or through mobile applications. Traditional self-storage, on the other hand, requires significant upfront investment to become operational. “There’s the expenditure of fitting out the building with units, [closed-circuit television] and security,” said Robert Scott, assistant director of Deloitte Real Estate, a full-service real estate firm offering traditional property services and financial and business consulting. “You open almost empty, and it takes time to fill the unit before breaking even.”
With available U.K. self-storage space about 71 percent full, according to a survey conducted by Deloitte, traditional storage market growth is predicted to come through higher rental rates rather than through new developments or facility expansions, according to the source.
Perceived competition for customers between valet and traditional storage providers could be overblown, according to Andy Jones, chief financial officer of Safestore Holdings PLC, which operates 97 wholly owned facilities in the U.K. and 25 in France. “We do not see [valet storage] as a threat, but complementary to what we do,” Jones told the source. “If you want to store a relatively small number of boxes for a short period of time, it works well.”