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Housing crisis drives £1bn

Sep 01, 2023Sep 01, 2023

Revenues rose to £990m last year as people unable to upsize their home opt to pile their possessions elsewhere

Britons have packed away enough possessions to fill Buckingham Palace more than 60 times over as the housing crisis, enduring consumerism and a sentimental reluctance to let go of inanimate objects means self-storage is now on the brink of becoming a £1bn-a-year business.

Self-storage units are proving cheaper than renting or buying a bigger home and are springing up alongside new housing developments across the UK, with at least 280 more stores planned between now and 2026 – a more than 10% increase.

In 2022, UK households and businesses piled enough additional items into storage units to occupy more than 2m sq ft (185,000 sq metres), driving up revenues among operators – including Big Yellow and Safestore – by 6.5% to £990m, according to a study by the property agency Cushman & Wakefield and the Self Storage Association UK.

Amid increasing signs that shuttling to and from a self-storage facility is becoming a routine part of urban life for hundreds of thousands of people, two-thirds of customers now keep their unit for around two years and 16% stay for at least five years.

Self-storage gains from both sides of the online retail boom, hosting online retailers who dispatch products to consumers, who haven't got room for them and so end up taking them to self-storage.

"Marvellous isn't it?" said Kevin Prince, the chief executive of Space Station, who opened his first unit in 1997, now manages 14 units, and is about to add 13 more. "Long may that continue."

The high cost of housing and shrinking residential floor space are key drivers of rising demand that is attracting global investors, not just in the UK but in other rent hotspots such as New York and California where people can pay $25,000 a year for a unit.

Demand is also driven by people acquiring possessions in the hope that they will soon be able to upsize their home, but being thwarted by the housing market, analysts said.

"Self-storage operators reported a combined £990m of revenue and increased profitability in 2022 as the sector's growth continued unabated despite the pressures on household budgets," the study concludes.

A 90 sq ft unit typically costs £273 a month to rent in London and £131 in the north of England, which is cheaper than residential property.

An industry survey of more than 1,800 UK customers found that the most common reason for using self-storage was a lack of room for the items at home, followed by a house move, major life event such as a death, inheritance or divorce, and renovations. One in five renters are now business customers, often e-commerce retailers.

The range of possible users is huge. Renters and staff told the Guardian that units had been used by homeless people as a base while they sofa-surf or sleep on buses; a heroin addict who broke the rules by moving in a mattress to sleep on; a family who wanted their son to learn the drums where it wouldn't disturb them; and by people trying to "live tiny" by having the smallest possible flat and using the storage as an annexe for half of their possessions.

Helping to embed storage in the urban fabric, the Space Station chain has installed a hairdresser, florist, vape shop, tattooist and dog beautician at one of his facilities in Shrewsbury. Many other operators are starting to add office space. In London's Kings Cross, where thousands of flats have been constructed in recent years, the finishing touches are being put to a new Big Yellow featuring a stylish brick facade equal in architectural merit to the nearby apartment blocks.

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"An increasing proportion of people, whether by choice or necessity, are staying in rented accommodation for longer," said Philip Macauley, the head of self-storage at Cushman & Wakefield. "On-site self-storage can be a valuable amenity for residents in large developments, especially if they don't have cars."

The industry describes its product as "sticky" because most new customers think they will only use it for a couple of months, but once many people move their stuff in, they struggle with the decision to take it out.

"We get very sentimental about inanimate objects," said Prince. "So that sentiment is good for the sector."

He added: "Nobody buys stuff to keep for life. We buy it and when we get bored of it we change it. Storage is good in that it encourages people to save things and reuse them rather than just throw them away and replace. I don't know what percentage of that actually happens because there's many occasions where we’ve had people stay for a long period of time and then they just phone the manager and say ‘can you get me a skip so I can throw all these things away’."

Self-storage is increasingly profitable. Big Yellow, which has 108 stores and is the UK's largest operator by floorspace, recorded a 30% increase in adjusted profits before tax in 2022, reaching £96.8m. Revenues at the next largest operator, Safestore, rose 14% in the same year to £213m.

In 2022, a single self-storage depot in Camden, London, was sold to Shurgard for £6m, and four properties in Banbury, Wednesbury, Frome and Amesbury were acquired by Storage King for £59m.

A 500-unit facility can be looked after by only four staff members.

More people say they have used self-storage more because of the cost of living crisis than used it less, according to a Cushman & Wakefield survey

The most likely age of a customer is between 55 and 64, and the most common income bracket is £21,000 to £31,000 a year, with demand falling among people with higher incomes.

Half of customers are single, widowed, separated or divorced.

65% of domestic customers have occupied their unit for about two years, and 43% for a year or less. Another 16% have had their unit for more than five years.

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