Why self-storage is taking off in Europe
Self storage is on the rise across Europe thanks to mobile populations and growing small businesses.
Whether it’s home movers needing a temporary place to stash their belongings or businesses looking for a viable way of storing goods, self storage is increasingly the go-to solution for Europeans facing a shortage of space.
In the last year alone the number of self storage facilities across the continent rose by more than 500 to reach 3,247. Established markets such as the UK, France, Spain, the Netherlands, Germany and Sweden, which are home to 85 percent of Europe’s self storage buildings, according to JLL and the Federation of European Self Storage Associations (FEDESSA), saw the highest levels of growth.
Ollie Saunders, Lead Director – Alternatives at JLL, says demand on the domestic side has been partly driven by the rapid rate of urbanization in Europe, which has resulted in people living in ever-smaller properties.
“Domestic users make up around 60 percent of the customer base – whether it’s people moving within their home country, moving abroad or getting divorced, or having a permanent store – that’s an increasingly larger driver of self storage solutions in some European countries,” he says.
In Sweden, for example, 47 percent of the population living in cities moved properties in the last five years. This compares with 31 percent in the UK and just 10 percent in Italy, figures from Eurostat show.
On the commercial side, particularly in the UK, small businesses such as eBay retailers and building firms have realised that self storage is a useful and flexible way of storing goods. They can easily increase or decrease the amount of space they rent, which is especially convenient for seasonal businesses.
Growing in size, evolving in design
There are now 8.7 million square metres of storage space in Europe – a third higher than in 2014 – but provision varies widely from one country to another with the UK, Netherlands and Iceland among the highest levels of storage per capital.
In contrast, Germany is a small but fast-growing market, which Saunders believes is one to watch. The number of facilities rose by 19 percent between 2016 and 2017 to 202. Aside from growing quickly, it is also helping to lead the way in alternative sustainability initiatives, with four operators installing green roofs and three installing solar panels.
Sustainability and size are not the only ways that the self storage market is evolving. A decade ago the easiest way for operators to get maximum visibility was to be located on big intersections. “The proliferation of the internet means that as long as they have lots of visibility online, operators can now open facilities in less prime locations,” says Saunders.
Some facilities have opened on mixed-use developments – for example with private rented sector accommodation above or a supermarket next door.
Meanwhile, several providers are using technology to try to keep ahead in the digital age. “A few years ago each facility would need to have around three full-time staff, whereas nowadays customers can get access to the building with their smartphone,” says Saunders. “Some operators have opened facilities in smaller buildings, with just 10,000 square feet of space, and technology means they can be completely unmanned.”
Room for more growth?
Although the self storage market in Europe is growing rapidly, it is still in its early stages and offers good investment opportunities.
“Self storage is offering attractive yields and good income returns with growth in rent and occupancy across nearly every European market in 2017. It has also proved fairly resilient to economic swings, managing to stay strong in the last recession,” Saunders says.
The market in Europe is still playing catch-up with the U.S., which sees transactions of between $2 and $3 billion every year. Europe doesn’t have nearly as much available land as the US, but Saunders still thinks the number of facilities in the UK alone could double.
“Demand is robust and awareness about the sector is continually rising. The next 12 months look set to be a positive period for operators and investors,” he concludes.