U.K. self-storage operators will have to operate more creatively to maintain high occupancy into the 2020s, according to Mark Shaw, founder and chairman of investment-fund management firm Tritax Group. Shaw, who has more than a decade of experience in the industry with market value in excess of £540 million as chair of Magenta Self Storage, believes operators are increasingly seeking new opportunities to grow through collaboration, joint ventures and investment in innovations like state-of-the-art business space and hot-desking.
“As head of a family owned self-storage operation, I am all too aware that the U.K. market is maturing at an exponential rate,” Shaw says, noting that 42 percent of the 42.2 million square feet of storage space in the United Kingdom is now rented by commercial tenants. The industry has evolved from its primary platform of providing a place for residential customers to store their stuff. Consider that one of every five units rented in the U.K. is to an e-retailer.
“Clearly, as leaders in the self storage industry, we have to move with the times—fostering the evolution as well as gearing up to service it,” Shaw says.
Ollie Saunders, lead director of JLL’s alternative-investments team agrees. “Self-storage is a fantastic asset class—resilient, predictable and mostly undersupplied with ever-increasing consumer awareness,” he says. “There are some new innovations coming into the sector, including the rise of metro storage in city centers and increasing use of technology to sell space and automate how buildings [operate].”
Investors have taken notice. Last year marked the highest level of direct investment into the U.K. self-storage sector at more than £350 million. “We expect 2018 will see a number of new ways for investors to access the market through joint venture or sale and manage backs,” predicts Saunders.
The simplicity of the self-storage business model not only makes it easy for entrepreneurs and investors to understand, it also helps fortify its consistently reliable performance against disruptors. “The challenges operators will face in the coming years are the increasing costs of online marketing and availability of suitable properties to grow the industry,” notes Rennie Schafer, CEO of the Self Storage Association of the United Kingdom (SSA-UK). “We are already seeing operators becoming creative with their online presence and booking systems to rely less on pay-per-click advertising to generate traffic to their websites.”
Portfolio growth for many operators is occurring rapidly, which reduces prime locations for newcomers. In the last six months, Magenta added a new self storage facility in Banbury, England, to its locations in Acton, Nottingham, Oxford and St. Albans. It also has secured funding for a subterranean storage facility on Errol Street in London, inside the former brewery vaults at the Barbican. Another development planned for West London will include self-storage and a mix of office and co-working space. The company aims to double its footprint of 267,000 square feet by 2022.
That’s just one example, but it’s indicative of the activity propelling the U.K. self-storage industry forward.
Julie Whyman is founder and managing director of Stefanius, a U.K.-based public relations firm and consultancy, which includes the SSA-UK among its clients. For more information, e-mail [email protected]; visit www.stefanius.co.uk.