Self-storage often flies under the radar of real estate commentators, yet it’s an asset class that is growing rapidly across Europe. The sector saw a record transaction volume in 2022 and appetite has continued to build in 2023.
According to CBRE, year-to-date investment volumes are currently at c.€594 million, with a strong pipeline of M&A activity across Europe expected to transact in the next 12 months. Savills report that Morder Intelligence forecasts the European self-storage market to increase from $2.75 billion in 2023 to $3.67 billion in 2028.
Across the continent, Europe’s self-storage market has almost 7,000 stores in operation, totalling 13.9 million sq m in gross area. Almost a third of these stores are in the UK, with a further 11% in Germany.
So what’s driving this growth?
“Generation Rent” and increased mobility
Firstly, a critical driver is consumers’ living arrangements. In England and Wales, the number of households renting their homes has more than doubled in the last two decades, while over half of the population in Germany live in rented accommodation, the highest level in the EU. In both the UK and Germany, a significant proportion of these renters are in privately rented accommodation, rather than social housing.
This matters because homeowners and those in social housing have lower levels of mobility than those in private rented accommodation. As people move more, it’s unsurprising that their requirements for additional storage space increases.
A reduction in home storage
Secondly, and sticking with trends impacting consumers, the proportion of space allotted for storage in new build homes is relatively small. Traditional 1930s apartment buildings in German cities like Berlin were built with a cellar in the basement for each dwelling, whereas today developers would rather maximise that space for more apartments.
Today it is common for apartments to be sold with the option of rented storage space nearby. You can see a similar picture in the UK, where government guidelines indicate between just 2.55 and 3.15 per cent of floor space must be set aside for new build homes.
This lack of space is combined with what could be called, a rise in ‘hoarding’. This can be seen across Western markets, where households have more possessions than ever before. Driven also by the notion of sustainable consumption, people are also increasingly averse to throwing things away and more likely to hold onto possessions. Combined, this increase in ‘stuff’ and the decrease in space at home helps to explain the increase in demand for self-storage for consumers.
The impact of e-commerce
Thirdly, and perhaps the largest transformation for the self-storage market over the last decade, is the rise in e-commerce. The growth of e-commerce has led to a change in real estate requirements for businesses – while they may no longer need a permanent site in every town in the country, there is an increasing need for businesses to store their goods and products in closer proximity to their customers to facilitate the increasing demand for same-day delivery. In this sense, self-storage can provide a flexible and affordable storage solution for businesses of all sizes.
Of course, another key factor in the rise of self-storage has been the Covid-19 pandemic, which has further accelerated all the shifting consumer and business trends listed above.
The future of self-storage units
Critically, there have been changes within the self-storage sector too. Container storage is becoming increasingly popular for consumers and businesses alike. Typically seen as dumb and dirty, change is afoot.
The humble shipping container invented in the 1950s, led to huge efficiencies in the cost and ease of transporting goods by road, rail and sea. Since, we’ve seen the rise of shipping container architecture including for use as homes. It’s no surprise then that they are now increasingly used for self-storage.
While container storage might seem analogue, combined with advances in technology self-storage suddenly becomes smart. Operating costs can be reduced by developing solar panels on top of containers to provide sustainable power, and smart containers that can tell you how many times they have been opened and whose key was used to open them, and how long they were open for provides useful data for companies and consumers. Online reservation systems, digital access controls, and advanced security features, all make the sector significantly more appealing.
At Sirius in Germany our self-storage boxes are part of our edge-of-town sites, and slightly larger than the size you typically see from traditional operators. Additionally, we also have container spaces at many sites too. From both self-storage solutions, customers can enjoy a lower price point in return for using a vehicle to transport goods to the site. We have found that our customers enjoy this greater flexibility.
Two final elements that we have been particularly focused on, is ensuring 24/7 access, 365 days a year. We also aim to dispel any myths about storage sites, and ensure that they are pleasant and welcoming whenever you visit. Security, lighting, and noise (we play low-level music) are essential for people to feel comfortable, safe and happy.