UK’s self-storage sector turning investor heads

The growth in consumer demand for space amid rapid urbanisation and increasing mobility has driven more business for self storage providers, especially in the UK. But the competition here is not just between consumers or business - now the sector is becoming increasingly competitive from a real estate investor perspective. 

As an island nation with great infrastructure, the land in the country naturally comes at a premium. So it’s no surprise that the UK is an outstanding market leader when it comes to self-storage - almost 50% of the total units in Europe are located in the United Kingdom. A 2019 Cushman & Wakefield report on the industry estimated around 45.6m sq ft of space is currently being offered, which with stable rental rates has turned over ~£750m in the last financial year. 

One reason could be that, according to the same report, only 46% of the UK public have good awareness of self-storage. For the operators, this means there is still a lot of opportunity to appeal to consumers. Consumer brand blindness however means that marketing, localised outreach, and collaboration are critical components of operators’ business models - allowing for a lot more room to grow.

Despite the UK’s success, Europe’s self storage sector remains undersupplied. At just under 4500 facilities across the continent, or nine storage providers per one million people, it is dwarfed by the US, which boasts over 160 providers per one million Americans.

Expansion is happening though, and with only a limited number of mid-tier operators and most facilities being owned and run by small companies, those looking to grow will have to look towards consolidation and acquisition. This fragmentation in the European market is proving to be a barrier for institutional capital, as the lack of access routes for investors is stunting the scale of the industry.

 

British and Irish GRI will gather the biggest real estate players across the UK and Europe to discuss investment strategy and supply/demand fundamentals, taking place in London on the 3-4 June. 

Article by Matt Harris