Operators within the UK self-storage industry are expecting profits to rise driven by an increase in new store openings and an improvement in consumer awareness – according to new research from global real estate adviser Cushman & Wakefield in conjunction with the Self Storage Association UK (SSA UK).
The Self Storage Association UK Annual Survey received responses from 73 separate companies covering 433 self-storage facilities – this sample represents more than 40% of the UK’s self-storage sites and over 60% of total storage space.
A detailed demand study was also commissioned for the report from YouGov to measure the level of awareness and capture perceptions of the UK self-storage industry.
After a period of limited new store openings following the recession, the self-storage industry is definitely beginning to grow, expanding by 1.3 million sq ft in 2014. SSA UK estimates there are now 1,022 self-storage sites in the UK (of which 159 supply container storage only), an increase of 13% when compared to 2013. Almost half of all new sites which opened in 2014 had some container storage.
The survey also states that operators are more optimistic about the outlook for 2015, with no respondents reporting an anticipated drop in profitability and nearly 80% expecting improved profitability.
There is approximately 35.7 million sq ft of self-storage space in the UK, which equates to an average of 0.56 sq ft of storage space per person in the UK.
The average rental rate for all stores showed an increase over the year of 7.1% to £21.00 per sq ft per annum. This virtually matches the rental rate as at 31 December 2011, the last reported result before the addition of VAT onto all self-storage revenues.
Total turnover of the industry in 2014 was around £402 million among approximately 440 operators. In all, these firms employed around 2,100 staff (full-time equivalents), the report states.
The demand survey results reveal an improvement in awareness, with the number of people who have never heard of the product dropping from 23% to 15%. However, 55% of consumers (62% in 2014) still have limited or no knowledge of what self-storage is. It is fair to conclude that demand levels for self-storage would improve if the level of awareness were significantly better, although the potential improvement is hard to quantify as the customers need for a storage solution often helps drive awareness. Overall awareness of self-storage is also higher in the South of England, particularly London.
Interestingly, 32% of consumers realised only they could access their goods in self-storage, not the store staff, while 67% of respondents could not name any self-storage brand.
Oliver Close, partner in Cushman & Wakefield’s UK valuation and advisory team, said: “With continuing expansion of the UK self-storage market and improving consumer awareness, positive sentiment is permeating through the industry from operators and investors alike – and they are anticipating a strong 2015 along with notable short-term growth.”
Rennie Schafer, CEO of the Self Storage Association UK, said: “While occupancy has remained somewhat low at 70%, the increase in average rental rate by 7.1% shows that businesses are getting more for their storage space and not sacrificing revenue for occupancy.”