- UK is home to almost 50% of all self storage space in Europe with 42.2m sq ft of lettable space
- Occupancy rates increase from 73.1% in 2015 to 75.8% in 2016 as consumers and businesses alike seek flexible space
- Net rental rates increased to the highest level since the study begun in 2006
- An estimated 10,000 new businesses launched last year in UK self storage units
LONDON, 19 June 2017: The UK’s self storage industry is flourishing – with UK residents renting four times more space per person than those in France, and 10 times more than counterparts in Germany, according to new research from Cushman & Wakefield and the Self Storage Association UK (SSA UK).
The UK Annual Industry Report, now in its 11th year, collected survey responses from 72 separate operators covering 466 self storage facilities, and for the first time also includes a survey completed by 2,127 self storage customers, providing clear insight into the market and the dynamics driving it.
The findings show the UK now has 42.2 million sq ft of lettable space, which totals 47% of all self storage space across Europe. With demand for this flexible space increasing, 24 new large self storage sites with over 200 units opened in the UK in 2016. Large self storage brands in particular have been expanding rapidly in recent years to ensure a larger chunk of the £540m UK market
Customer survey findings
Nearly two-thirds (65%) of customers are aged between 40 and 65 years old, and 81% are between 35 and 70. This can in part be attributed to the fact that Millennials are settling down later in life, in terms of establishing more permanent relationships, having children and moving from rented to permanent residences. These life changing moments are often a catalyst for people to use self storage. Divorced or separated people are also more than twice as likely to use self storage as a single person.
The survey of users also highlighted that the most common reason given for taking a unit is lack of room or a need to create space at home (51%), followed by 21% saying they are between properties. The industry also has a high proportion of repeat customers with 39% having previously used self storage.
Operator survey findings
The overall strength of the UK market shines through. Occupancy rates across the whole country performed well, rising from 73.1% in 2015 to 75.8% in 2016, despite overall lettable space also increasing, indicating that demand is still growing faster than supply. London maintained the highest occupancy rates at 81.4%.
Occupancy increases have not been at the expense of revenue with rental rates across the UK also increasing by 2.4% to £22.68 per sq ft. This is the third year in a row the industry has shown growth in both occupancy and rental rates, a trend that is likely to continue as companies look to capitalise on the strength of the market.
Unsurprisingly net rental rates in London, which sit at £29.45 per sq ft, are almost twice those in the East Midlands and the North. However growth in rates within London has been limited with the Northern markets showing more significant increases. Scotland, for example, has shown the greatest increase, rising 23% from £18.29 to £22.49 in the year.
An estimated 1.7m sq ft of space was added in 2016 with approximately 25% coming through expansion of existing stores or fitting out previously-unused space. Around a third of the UK’s 1,430 self storage facilities, and close to 50% of total storage space, are owned or managed by large operators (10 or more sites).
Rennie Shafer, CEO, UK Self Storage Association, said: “It is a popular misconception that self storage is a response to our tendency to hoard things that are well past their sell-by date. While this may be true for a very small percentage of users, the vast majority do so at transformational times in their lives, both personally and commercially. Most new self storage customers initially take their unit for a short-term need, using it for two to six months on average, such as moving house or having work done at home, and then move out when that need is satisfied.
“However, a significant proportion become long-term customers. This is especially true for business users who grow with us from an initial start-up to a fully-fledged company. Some 44% of business customers have stayed for three years or more, compared with 31% of personal customers. Indeed, we estimate that more than 10,000 new businesses were launched last year in UK self storage units. Around 42% of all self storage space in the UK is rented to business owners and a big part of this is online retailers. Self storage offers the flexibility to scale up or down rapidly, giving businesses a cost-effective alternative to traditional leases on commercial premises. Many self storage stores also offer additional services to business customers such as use of office space, internet access and printing.”
Oliver Close, Partner in Cushman & Wakefield’s UK valuation and advisory team, added: “Whether it be moving house, downsizing, starting a family or having your children return home – it is clear the UK public relies heavily on self storage facilities to help ease major life events. Equally it seems, we all need more space to accommodate the growing number of possessions we have. This is reflected in continued buoyancy in the UK self storage market. The industry is flourishing and companies are expanding their portfolios, confident that the growth factors that underpin the sector are here to stay.”