Commercial property: Room for growth in self-storage sector
Thanks to the pandemic, demand for self-storage services has never been so high, and a new report says there’s still space to expand.
People decluttering to make space for home offices, a booming property market and the growth of online retailers have all led to the use of self-storage space in the UK reaching a record level of 82 per cent of lettable space occupied.
This new high coincides with the largest annual increase in occupancy levels since records began in 2004.
Revenues of self-storage operators increased by 16 per cent annually to £890 million in 2020, as clients retained their services longer due to lockdowns, and more enquiries moved online reducing in-person contact.
The self-storage sector has proved itself resilient and adaptive, meaning it is well set for future growth and investment, according to the latest annual research into the sector’s major operators and customer trends from global real estate firm Cushman & Wakefield and the Self Storage Association UK.
In Scotland, overall occupancy rates rose from
84 per cent to 84.9 per cent in established facilities between 2019 and 2020, with Edinburgh reporting a significant increase between 2018 and 2020 of 71.23 per cent to 82.37 per cent.
Operators in areas around the Capital, such as Big Yellow, Kangaroo and Edinburgh Self Storage, located in the landmark Jenners Depository building, are a popular choice with clients ranging from students renting lockers of just a few square feet to companies renting small warehouses.
Philip Macaulay, head of self storage at Cushman & Wakefield, says: “Self storage has continued to flourish in Scotland during the pandemic, and there has been a sharp increase in occupancy levels and rental rates demonstrating increasing demand in the sector.
“Going forward, I do not anticipate these levels will fall away.”
The 15th annual industry report examines a range of data points and surveys of operators, customers and investors on the performance of the sector, and growth prospects for 2021.
One key driver was the pandemic-driven changes in consumer habits. Self-storage operators have felt the benefits of customers rearranging their living spaces and decluttering to accommodate home working.
The recent surge in residential property moves has also contributed to demand, and there has been a significant uptick in retail business customers using self-storage space during 2020, in response to smaller operators expanding their online presence and subsequently requiring more space for additional stock.
Venders also had to make more space in their premises to allow for social distancing measures, and less reliance on just-in-time stock also led to a rise in use of storage space by retailers.
The UK makes up around 43 per cent of the European self-storage market and has the most storage space per person of any country in Europe.
The report estimates there are now just shy of 2,000 self storage facilities in the UK operated by 998 brands. This amounts to 50.5 million sq ft of storage space, or 0.74 sq ft per head of population.
Average rental rates had been within a range of less than 50p for the past five years, but there was an increase of 86p in 2020, with rates reaching their highest level on record, just short of £24 per sq ft per annum.
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