Shurgard’s UK operation: How is this self storage company distinctive?

Shurgard Self Storage UK is part of a much larger storage operation. Within Europe, Shurgard Self Storage has outlets in 7 countries (including the UK, France and Germany), but it is also a subsidiary of Public Storage of the US.

Public Storage is huge and has 2,100 stores, so the UK operation – with its 22 storage centres – is relatively small beer. Thus the British arm of Shurgard Self Storage has a large gorilla sitting behind it, to which it can look for advice and help in managing and marketing its storage outlets.

To the lighthouse for self storage!

One of the most distinctive features of Shurgard’s stores, which are usually purpose-built, is the actual lighthouse, built into the side of their warehouses, which is said to convey a sense of security and demonstrate innovation.

Certainly the three-dimensional motif is very memorable and now quite widely recognised in the London area, where most of Shurgard’s self storage facilities are located: like Access Self Storage, Shurgard is a very London-focused storage company.

There is a nice website with a collection of photos of some of the lighthouses and some entertaining lighthouse commentary at:

http://www.strangeharvest.com/2009/01/2-the-lighthouse-self-storage.php

A European outlook on self storage

Frank Boot is in charge of sales and marketing for Shurgard in Europe and he is also an important figure in the European self-storage industry. He is the president of FEDESSA, the European Self Storage Association, and is based in Brussels, where he is responsible for about 190 storage sites in Europe of which only 22 are in the UK.

In Germany Shurgard have sites in Cologne and Düsseldorf but are actively considering further expansion in Germany, which –  it was agreed at recent FEDESSA conference –has “huge potential for self storage”.

Frank has been with Shurgard Self Storage for 13 years, which takes him back to the early days of Shurgard’s roll-out of storage centres in Europe, although there is some uncertainty about when this started. Shurgard’s UK website suggests 1992 was the start, but their corporate site says 1995 marked the opening of the Brussels store.

Another interesting discrepancy between the corporate site and the UK site is the number of self storage customers that Shurgard has in Europe. The UK site claims 60,000 whereas the corporate site says 90,000. Anyway, it’s certainly a lot of people storing stuff and even at the lower figure it would be about 315 storers per outlet – though the higher figure of about 470 users per facility looks more plausible.

History of Shurgard Self Storage in the UK

The UK saw its first Shurgard Self Storage outlet open in 1999 in Croydon and growth has been steady ever since. The growth in the business continued after Shurgard was taken over in 2006 by the US group Public Storage. Shurgard Self Storage became publicly quoted when it was taken over by Public Storage and a more recent transaction in April 2008 bringing in the New York Pension investor, the New York Common Retirement Fund, effectively valued Shurgard Self Storage Europe at over £600 million.

Although new stores can take time to fill up, it is said that the more mature storage centres are typically 85% full.

Shurgard running a profitable business

Not only are Shurgard’s storage services useful but they make a good profit. Although the operation is run through more than one company, one can get a good insight into their finances from the published accounts of one of their operating companies, Shurgard Storage Centres UK Limited, which owns 11 stores and actually operates 7 of these. The other 4 are leased to another subsidiary – apparently for an average of about £600,000 per annum each.

The 7 that it operates have a combined turnover from operations of almost £8 million. Including the lease income, the 11 stores make a combined profit after administrative expenses of almost £5 million. They then have interest and similar charges to pay leaving them with a pre-tax profit of about £3.8 million on these 11 stores out of their total of 22 stores.

They paid corporation tax of £1.3 million last year, so there is little doubt that their self storage services are profitable. Of course, included in their expenses there may be a payment for use of the Shurgard Self Storage brand name and goodwill. In looking at their profitability one should also take account of the capital tied up, which – according to the balance sheet for this company – is about £50 million.

Bolting on new storage facilities

Shurgard’s UK storage business mainly grows organically, but it has also expanded through some canny acquisitions. For example, in the UK when the Red Devil Storage operation in Kennington, South London, ran into financial difficulties Shurgard bought it from the adminstrators. This store – bought by Shurgard in December 2009 –  is a site of over 15,000 square feet with about 370 units.

In letting out units Shurgard often uses the “£1 for first month’s rental” offer and is very effective at local marketing:  when it opened its purpose-built store in Forest Hill, South London, it did a very extensive mail drop to all local businesses explaining what self storage is, and offering special deals to get people in.