Self-storage is big business in the US where it has been established for over 40 years and everything we are seeing anecdotally suggests the concept is gaining in popularity here too.
The concept of self-storage is simple enough. It is basically do-it-yourself warehouse storage space for businesses and households on a pay-as-you-go basis. Every customer is provided with a set of keys and access to goods is 7 days a week. The installation of CCTV cameras, fire alarms and remote monitoring systems provides for high level security at all times. Our research indicates that the average price for a 50 sq ft box is £65 per month, dependent on location, so this is a low-ticket item.
In addition demand tends to be price-inelastic because it is based on the growing need for flexibility. Key industry growth drivers include a rising level of consumer familiarity, an active housing market, increasing population mobility and cultural changes that have led to a rise in the divorce rate and single parent families.
In the business category, Lok’nStore says retailers, removal companies, manufacturers and even councils and universities are all using self storage to cope with peak trading periods such as the run up to Christmas, for instance.
Latest industry estimates suggest the US has over 35,000 self-storage centres, or c.4.5 sq ft per head of population. The numbers for the UK are c.400 selfstorage centres providing the equivalent of c. 0.2 sq ft per head of population. Lok’nStore management believe the UK could potentially support at least 1,500 self-storage sites.
Presently, 70% of the available sq ft in the UK is based in the South of England, partly because of high catchments of A-B-C socio-economic groups, but also because of high penetration rates that allow for multiple stores in any one location.
Obtaining external estimates on the growth of the UK self-storage industry is difficult – this is an immature market that has only truly been established since the early 1990’s. Anecdotal evidence from the industry’s 5 biggest players, Shurguard, ACCESS, Safestore/Mentmore, Big Yellow and Lok’nStore (which between them control 45% of the market in terms of developed space) all point to growth of 20% 4 plus over the past five years however, and most industry observers believe this trend is set to continue.
In its latest results to end March 2004, Big Yellow reported sales growth in its mature outlets of 17% while the growth reported by Lok’nStore’s eight stores over 5 years of age in the year to end July was 17.8%. Below the 5 leading players, we believe the selfstorage market in the UK is still very fragmented with a high proportion of small operators running between one and five units.