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The Health of Self-Storage in the United Kingdom

Safestore, one of the U.K.’s largest self-storage operators, looks at the health of the industry, explaining the challenges operators face, the current financial outlook and what can be expected in the future.

March 28, 2016

4 Min Read
The Health of Self-Storage in the United Kingdom

By the Safestore Marketing Team

Despite not arriving in the United Kingdom until the 1980s, the self-storage industry has grown significantly, and really took off in the late 90s. Safestore, one of the U.K.’s largest operators, looks at the health of the industry, explaining the challenges operators face, the current financial outlook and what can be expected in the future.

Industry Overview

The self-storage industry continues to grow in the U.K., and there are now more than 400 operators offering approximately 1,022 facilities. These range from large multi-center companies such as Safestore, which has 96 stores, to smaller, independent enterprises. The five largest companies account for 29.5 percent of the market, compared to 11.5 percent in the United States.

Despite the recent economic downturn, the U.K. self-storage industry has proven to be resilient. A 2015 report by the Self-Storage Association United Kingdom (SSAUK) shows the industry now generates revenue of around £355 million. It has more than 250,000 customers and offers approximately 35.7 million square feet of storage space. This equates to a nationwide average of 0.56 square feet per person, which is significantly lower than in the U.S. (7.3 square feet) and Australasia (1.6 square feet). This low-density supply, however, isn’t seen in London, which sits at 1.03 square feet per capita. This is a direct reflection of the number of storage facilities, consumer demand and property prices in the capital.

As far as demand, there are a number of reasons consumers and businesses turn to self-storage. For consumers, it’s primarily social factors: relocation, marriage, divorce and retirement. Businesses use storage for archiving, storing stock or workshop space.

Challenges Faced by Operators

Awareness. Despite the SSAUK survey revealing an improvement in industry awareness, 55 percent of consumers have limited or no knowledge of the service. In addition, only 60 percent could name a storage company in their local area. Awareness is growing slowly but is expected to increase given the recent surge in inquiries generated online—as high as 80 to 90 percent for the industry leaders.

Regulation. The regulation changes in value-added tax (VAT) that took place in 2012 had a negative impact on the industry, but the majority of self-storage operators have been able to absorb the increase. Although further regulation could have a similar effect, there are no identified changes in sight.

Expansion limits. There’s a natural limit to how big the industry can expand in the U.K. This is due to a lack of land and the fierce competition for it once it becomes available, especially in big cities. Even still, supply is expected to grow about 3 percent annually, with the barriers mentioned above likely to influence the key markets. Getting approval from planning boards is normally manageable.

Surplus capacity. According to the SSAUK, industry occupancy rates have been around 70 percent in 2015. Occupancy is expected to rise gradually as consumers begin to fill the capacity built before the financial crisis.

Financial Outlook

There has been a significant improvement in self-storage business confidence since 2013. This optimism has been influenced by the industry’s successful absorption of the imposition of VAT in 2012.

The positive financial situation is highlighted by the 2014 total industry turnover, estimated at £402 million among 400 operators. In addition, rental rates increased by 7.1 percent year over year. The industry has also seen a shift toward a more dynamic pricing model based on seasonal factors and unit-size availability.

The Future

Across the U.K., self-storage appears to be growing at a healthy pace, with London and the Southeast outperforming other regions. It seems to have weathered the recession and imposition of VAT, and is beginning to attract keen investment.

After a period of limited new-store openings following the recession, the market grew by 1.3 million square feet in 2014. More organic growth is expected, although the entrance barriers are getting higher due to the shortage of suitable land. In addition, further consolidation can be expected through acquisition and mergers.

In the next year, Safestore is planning to open three new stores, including its first new facility since opening a property in Staines, England, in 2012. This further highlights the confidence in the market and evidence the U.K. industry has recovered from the recession and VAT regulation.  

Regarding industry awareness, there’s potential for a cultural shift. The industry is still relatively immature compared to the Australian and U.S. markets, where storage is more ingrained in the culture. However, there’s a possible tipping point in the near future.

Safestore operates 97 self-storage facilities in the United Kingdom and 24 in Paris. It also has two business centers and manages 12 Space Maker stores. For more information, visit www.safestore.co.uk.

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