Why invest in self storage

Self-Storage was first established in the UK in 1980’s, initially in the London area. The industry continues to grow steadily in the UK and for the five years to 2009 has recorded growth rates of between 8% and 15% per annum.

Market Appraisal

Storage rental has continued to increase in both price and volume during this period. This has been fuelled by the growth of multi-site operators such as Safestore, Big Yellow, Access, Lok’n Store, Shurgard, Space Maker, Storage King and HSIL Property, as well as smaller businesses looking to enter the sector.

The latest UK Self-Storage Industry Association (SSIA) annual report, prepared by Mintel in February 2010 reveals that the UK self-storage industry has remained resilient and continued to grow throughout the recent economic slowdown. The report concludes that new operators are coming into the market and that consolidation and re-organisation is starting to take place within the sector – a sure sign of business confidence in the industry. Nearly half (49%) of operators state that they plan to open one or more sites in the next five years and multiple site operators such as Store First have continued to push through above inflation to increase their rates.

In comparison, other commercial property sectors have seen a sharp decline since 2008 due to the recession and subsequent economic slowdown.

Demand for storage facilities has historically exceeded all targeted projections and demand is still increasing – as evidenced in the Mintel report. There are a number of reasons why both consumers and businesses are increasingly turning to self-storage.

For consumers the primary reasons remain social factors such as the increase in single occupancy households, families moving home, marriage, divorce, retirement and downsizing. Lack of available suitable housing stock for families and single people all result in the need for consumers to enter into storage for both short and long term contracts.

Businesses are increasingly using self-storage solutions to store and archive files and paperwork, to store stock and office equipment and to meet fulfillment needs driven by e-commerce. The flexibility of self-storage has a strong appeal to small and medium sized businesses who do not want to make a large capital outlay for storage space. In addition to this,growing public awareness of the industry and the concept of self-storage has also contributed to its development. For these reasons, the UK’s Self-Storage companies have seen the highest growth and highest yielding returns within the commercial property sector over the last decade.

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