Real estate investors both in Europe and globally are increasingly seeing the self storage industry as a compelling investment opportunity. This sector has shown consistent growth, and the general public is becoming more aware of this emerging asset class.
The self storage industry began in the United States in the 1950s and has since evolved into a dynamic and rapidly growing global market. Self storage facilities come in various forms, including converted or newly built internal storage units, external container sites, and mixed-use developments. Essentially, self storage provides business or domestic tenants with space they can rent on either a short-term or long-term basis. These facilities can vary significantly in size, ranging from just a few units to over 1,000 units in some of the largest locations.
Before diving into why you should consider investing in self storage, let’s take a look at the state of the European market.
The European Self Storage Market
According to the 2023 FEDESSA Report, Europe’s self storage industry now comprises 6,929 stores, covering a total of 13.9 million square metres in gross area. The UK leads the industry with a 32.9% market share in store count, followed by France at 13.4% and Germany at 10.9%. This report includes data for both internal stores and container sites.
A key driver of growth in the self storage industry has been the evolving lifestyle of Europeans. With more people living in smaller apartments or shared spaces, the demand for additional storage options has become crucial. Self storage facilities offer a convenient and secure solution for individuals and businesses to store their belongings.
Additionally, the rise of e-commerce has significantly impacted the self storage industry. With more businesses entering online retail, the need for warehousing and distribution centres has surged. Self storage facilities provide a cost-effective alternative for businesses to store their inventory and manage logistics efficiently. This trend is expected to continue as e-commerce continues to thrive in Europe.
Why is Self Storage a great investment?
For many, investing in self storage provides a valuable opportunity to diversify their portfolios. This sector is renowned for its resilience and offers distinct advantages, including low operational expenses, the ability to appeal to a diverse tenant base, and flexibility in adjusting rental rates as needed.
- PORTFOLIO DIVERSIFICATION
This is essential to a successful investment strategy. Some of the unique benefits of the industry that illustrate why it is a good diversification solution include: rental rate adjustment frequency, diverse tenant base and relative resistance to recession.
- RETURN ON INVESTMENT
In developing markets, self storage operators are typically healthy annual returns. Due to its robust stabilisation characteristic, good returns nearly always continue over the life of the investment.
- REALISING YOUR GAINS
A large majority of investors come into self storage with their ‘exit’ in mind. A successful exit strategy could go like this: over a medium term, invest in a series of self storage facilities, build, and run professionally. Build a brand and stabilise the rental space in a reasonable period.
- GROWTH (OF YOUR SELF STORAGE INVESTMENT)
The initial investment grows as your self storage facility starts filling up rapidly and the need to expand is on the horizon. Your next building acquisition will typically be funded from the cash flow of your existing self storage business.
- UTILISE UNUSED SPACE
Self storage sizes can range from 10 sq. ft to 1000 sq. ft. Utilising unused space (internal or external) within a facility or on a piece of land by building self storage will help operators maximise revenue.
- LOW STAFF REQUIREMENT
On average, a self storage facility requires only 1 to 3 staff members to sell space and operate. This reduces personnel costs and with technological advancement, you could also automate your site.
How can Janus help?
Janus is the industry’s leading provider of self storage solutions, catering to both self storage startups and major operators across Europe. Our expertise helps you optimise your rentable space and develop state-of-the-art facilities.
We offer a comprehensive range of solutions to meet all your self storage needs, including:
- Access control systems
- Doors and partitions
- Relocatable external units
Considering an investment in self storage? Contact us today or download our “Getting Started in Self Storage” e-book.
For more information about our self storage and access control solutions, reach out to us at sales@januseurope.com or call +44 (0) 20 8744 9444.
