The self-storage market in the UK and France remains relatively immature compared to geographies such as the USA and Australia. The Self-Storage Association (“SSA”) Annual Survey (May 2016) confirmed that self-storage capacity stands at 0.59 square feet per head of population in the UK and 0.15 square feet per capita in France. Whilst the Paris market density is greater than France, we estimate it to be significantly lower than the UK at around 0.36 square feet per inhabitant. This compared with 7.75 square feet per inhabitant in the USA and 1.8 square feet in Australia.
While capacity increased significantly between 2007 and 2010 with respondents to the survey opening an average of 32 stores per annum, new additions have been limited to an average of 18 stores per annum between 2011 and 2015.
New supply in London and Paris is likely to be limited in the short and medium term as a result of planning restrictions and the availability of suitable land.
Respondents to the survey indicated aspirations to develop an average of 31 stores per annum from 2016 to 2018. However, history has shown that actual developments have averaged less than 50% of respondents’ aspirations over the last three years. This suggests that around 15 new stores are likely to be added in the coming year.
The supply in the UK market, according to the SSA survey, remains relatively fragmented. Safestore is the leader by number of stores with 109 wholly owned sites, followed by Big Yellow with 73 wholly owned stores, Access with 58 stores, Lok’n Store with 26 stores, Shurgard with 25 stores and Storage King with 24 stores. In aggregate, the top ten leading operators account for 33% of the UK store portfolio. The remaining c.700 self-storage outlets (including 195 container based operations) are independently owned in small chains or single units. In total there are 490 storage businesses operating in the UK.
Our French Business, UPP, is mainly present in the core wealthier and more densely populated inner Paris and first belt areas, whereas our two main competitors, Shurgard and Homebox, have a greater presence in the outskirts and second belt of Paris.
Consumer awareness of self-storage is increasing but remains low, providing an opportunity for future industry growth. The SSA survey indicated that 58% (55% in 2015) of consumers either knew nothing about the service offered by self-storage operators or had not heard of self-storage at all. The opportunity to grow awareness, combined with limited new industry supply makes for an attractive industry backdrop.
Self-storage is a brand-blind product. In a new question in the 2016 SSA survey, only 12% of people responded positively that a brand would influence their purchase decision. In addition, 59% of respondents were unable to name a self-storage business in their local area. The lack of relevance of brand in the process of purchasing a self-storage product emphasises the need for operators to have a strong online presence. This requirement for a strong online presence was also reiterated by the SSA survey where 68% of those surveyed (69% in 2015) confirmed that an internet search would be their chosen means of finding a self-storage unit to contact, whilst knowledge of a physical location of a store as reason for enquiry was c.28% of respondents (c.24% in 2015).
There are numerous drivers of self-storage growth. Most private and business customers need storage either temporarily or permanently for different reasons at any point in the economic cycle, resulting in a market depth that is in our view the reason for its exceptional resilience. The growth of the market is driven both by the fluctuation of economic conditions, which has an impact on the mix of demand, and by growing awareness of the product.
Our domestic customers’ need for storage is often driven by lifestyle events such as births, marriages, bereavements, divorces or by the housing market including house moves and developments and moves between rental properties. It is estimated that UK owner-occupied housing transactions drive around 10-15% of new lets.
Our business customer base includes a range of businesses from start-up online retailers through to multi-national corporates utilising our national coverage to store in multiple locations while maintaining flexibility in their cost base.
Safestore’s customer base is resilient and diverse and consists of around 55,000 domestic, business and National Accounts customers across London, Paris and the UK regions.