How has the recession affected European self storage?

As everyone knows, these are challenging economic times. The recession that began in 2007 has left people across Britain and Europe with lower disposable incomes, as unemployment has increased, salaries have remained static, and credit has become scarcer.

The self storage industry has potentially been hit by a double-whammy of repercussions from this. Much of its business is tied to the housing market, which is struggling against the lack of mortgages and lower property prices, while at the same time many people are trying to cut back their domestic expenditure in any way they can.

Recently, several of the continental economies in which self storage is trying to establish a foothold, especially Ireland and Spain, have been in the news for threatening to collapse under a weight of government and consumer debt.

In other words, the outlook for self storage during the recession has been pretty bleak. But how much of a decline has actually taken place in European self storage?

Self storage: the pain in Spain… and Ireland, and Holland, and Denmark…

FEDESSA, the Federation of European Self Storage Associations, recently released its seasonal newsletter with an update on the self storage associations in different European countries.

Virtually all of them had lost members in the previous year, and reported challenging trading conditions such as falling occupancy and stagnant rents. The position in each country was as follows:

Spain – Membership of the Spanish self storage association has declined slightly in the past year to 26 companies running 62 facilities, following the loss of a member that owned two self storage centres. The spectacular bursting of Spain’s housing bubble, coupled with over 20% unemployment, has had such a negative impact on Spanish self storage that many companies who entered the market in the past two years are now diversifying into alternative businesses in order to survive.

Ireland – Irish self storage hasn’t escaped the parlous economic conditions in the rest of the economy, causing it to struggle. High unemployment and household debt, plus the lack of available mortgages, have caused a huge property downturn, which severely affects Irish self storage because 70% of enquiries are property-related. Struggling small businesses are also spending less on self storage, contributing to a three year downturn in the sector characterized by falling revenues, declining rental charges and cutthroat competition for customers.

The Netherlands – Dutch self storage endured a turbulent year in which two multi-site self storage companies left the association after going bankrupt, while six single-facility operators joined. It left them with 45 members who control 107 facilities, a net loss of one self storage centre since March 2010.

Denmark – Seven member companies run a total of 38 facilities, with one company having left since spring 2010. However, existing members have opened two new self storage facilities in the same period, suggesting they remain optimistic. Problems include declining occupancy levels for several members and flat or declining price levels, with a resulting fall-off in new self storage companies entering the market.

Czech Republic – Self storage is still growing very slowly, with the entire industry restricted to just three sites in Prague. Its profile remains so low that the Czech Self Storage Association doesn’t yet have a website.

France – Three members: UPP, Shurgard and Homebox, between them run 133 facilities, demonstrating how concentrated the French self storage industry remains. This accounts for 59% of all French self storage centres, while a growing number of independent operators control the rest.

UK Self Storage: Faring better than most

The same newsletter also emphasizes that the UK remains the dominant player in European self storage. It has by far the largest association, with 200 members controlling 500 facilities, and has also shown resilience during the recession.

However, there has been some fluctuation in SSA membership, as since March 2010 the association has lost 8 members and 25 facilities, while gaining 18 new members and 23 facilities ‒ a strong performance under the circumstances.

There has also been a decline in new self storage facility openings, as companies looked to increase occupancy in their existing stores rather than take on the risk of new developments.

It’s worth remembering that these figures may hide some distortions, as in the UK fewer than half the total number of self storage companies actually belongs to the association. Nevertheless, they provide a fascinating insight into the trends that have gripped European self storage over the last year, and show how much potential for improvement remains as we enter 2011.

One Response to “How has the recession affected European self storage?”

1. Debbie Clark says:

   January 13, 2011 at 12:56 pm

   I have worked in Self Storage in Europe since 2004 and have been involved in around 50 of the Spanish Self Storage sites. I know most of the Spanish Self Storage operators and Cavale is a member of AESS. Most of the operators are entrepreneurs and already have other business interests outside of Self Storage so I am not surprised that they are diversifying, that is what entrepreneurs do. I beleive the most negative impact on the Self Storage market in Spain is lack of available funding from banks (like most other EU countries). Given that only 10% of the public are aware of Self Storage in Spain, the market could easily double even in the current economic climate. In fact there are opportunites for Self Storage operators as small businesses downsize there warehouse space. It is very difficult to rent any warehouse space under 100m2 in Spain, whereas Self Storage can give flexibility in both size of units and period of rental contract. How Self Storage companies market themselves and their product offer will become an increasingly important factor in determining which companies grow and which are left behind. A good example of a company that has it’s finger on the pulse is Bluespace, Spain’s market leader with 17 stores, continues to grow despite the economic difficulties Spain faces.