Self-storage industry hits £1bn

Self-storage has now become a £1bn a year business in the UK, despite a slight drop in occupancy levels from the highs seen during the pandemic.   The latest annual report on the sector from Cushman & Wakefield and the Self Storage Association UK shows that the industry, led by Big Yellow and Safestore, turned over just under £1.1bn in 2023, up from £990m the previous year. Philip Macauley, head of self-storage at Cushman & Wakefield, said: “This is testament to the enduring and evolving appeal of self-storage, which is the fastest-growing real estate asset class since 2005, and the role it can play in people’s lives as they navigate milestones and bumps on the road.” There is now 60m sq ft of self-storage space across the UK, up by 8.1% or 4.5m sq ft year-on-year. This means that space has tripled since 2005. However, there is still only 0.89 sq ft of storage space per person (up from 0.82 sq ft last year) – considerably smaller than markets such as Australia and the US which supply 12 sq ft and 7 sq ft per capita respectively. The disparity suggests “a significant potential upside,” the report says. On the back of the UK’s latest increase in self-storage space, occupancy rates slipped by 2.5 percentage points year-on-year to 77.5%. This is the second consecutive fall from the pandemic-fuelled peak of 83.3% in 2021. The report puts this down to a softening of pandemic driven changes to people’s housing and the increasing cost of living. Fewer house moves will have also had an impact. Occupancy levels are still just above the pre-pandemic rate of 76.2%. Average rents ticked up slightly, too, to £26.23 per sq ft. Revenue per sq ft was up 1%. Industry consolidation continued during 2023. Notable industry activity included Nuveen’s acquisition of Easistore’s portfolio for £84m and Pithos Capital and Davidson Kempner Capital Management’s acquisition of the UK Storage Company for £120m. So far in 2024, Shurgard has agreed to buy Lok’nStore with an equity value of around £378m. A number of larger urban stores were opened last year. The largest of was Big Yellow Kings Cross London, with a maximum lettable area of 125,000 sq ft. However, the report says that this kind of mega site is becoming less common, with the average store size being 22,173 sq ft, down from almost 30,000 in 2017. Further growth of smaller, rural sites is expected, in line with demand and site availability and the ability to run un-manned sites using technology. A total of 41 self-storage sites were opened last year and a further 11 sites using shipping containers were added. Large operators are expected to continue their aggressive expansion plans for at least the next three years. Rennie Schafer, chief executive of Self Storage Association UK, said: “While the pandemic gains for the self-storage industry have softened slightly in 2023, the sector maintains momentum with nearly half of operators expecting the market to improve throughout 2024. “Despite the increasing cost of debt, delays in planning approvals, and easing of enquiry levels, self-storage is bolstered by the inevitability of life’s milestones – hatches, matches, and dispatches – which, alongside the precarity of the UK’s housing market, will continue to bolster what is ultimately a needs-based purchase.” Photo © Joshua Coleman/Unsplash