SSA UK 2011 survey provides cause for cautious optimism

The fifth consecutive annual survey of the UK self storage industry by the Self Storage Association suggests that it has weathered the recession well so far, with all seven of the largest companies having returned to profitability after registering declines during 2008 and 2009.

In total, 82 separate self storage companies who are members of the Association responded to the survey, which was conducted on behalf of the SSA by commercial property consultancy firm Drivers Jonas Deloitte.

Between them they operate 440 individual self storage centres, which is roughly one-third of the total number in the UK. Firms which exclusively offer containerized self storage were not included in the results.

UK self storage supply continues to increase

The number of self storage centres in the UK has continued to increase, according to the survey. In 2009 and 2010 combined, a total of 43 new self storage facilities were opened by SSA members, although this represents a decrease from the 119 which opened between 2006 and 2010.

Their geographical spread has continued to expand, with the majority of these recent additions – 55% – being located in the Midlands, the North, Wales and Scotland, while less than a quarter were in the South East, which had 45% of UK facilities in 2009.

The expensive land and high degree of competition from established sites create high barriers to entry for new self storage centres in the South East, so it’s understandable that other regions would seem more attractive to new entrants in these uncertain economic times.

Overall, the SSA’s members have 29.5 million square feet of rentable space between them, which would give everyone in the UK half a square foot each. However, the uneven distribution of self storage centres means this figure varies substantially from place to place; in London and Edinburgh, there are nearly enough self storage units for each of their inhabitants to have a square foot to themselves, while Liverpool and Birmingham are both below the national average with just 0.44 square feet per person.

SSA members see improved finance

Most of the SSA’s larger members have now recovered financially from their recession-induced blip, although levels of debt remain high.

The improvement in the finances of the seven largest companies has been underpinned by steady upward trends in average length of stay – now at 38 weeks, compared to 25 in 2008 – and a new high of £21.97 for the average rental cost per square foot each year.

The return to growth has enabled the 7 largest companies to reduce their debt levels, a move incentivized by tougher bank lending conditions and reduced rates of expansion. Five years ago they had an average gearing level of 200%, but following reductions this now stands at 140%.

Great expectations for self storage in 2011

The SSA members were also asked about their expectations for the industry in 2011, with the majority saying they thought conditions would improve.

Nearly all the companies thought occupancy levels would increase, while 74% expected the market to bear further rises in rental rates. Only 8% thought they would need to make the incentives they to offered new customers more generous, such as free rental periods and van hire.