Demand for self storage remains high across Europe, presenting lucrative investment opportunities
A new report from the Federation of European Self Storage Associations (FEDESSA) and global real estate advisor, CBRE, indicates continued strong demand for self storage across Europe, presenting a lucrative opportunity for investors and developers.
According to the report, Europe’s booming self storage market currently spans 16.5 million sq m in gross area, a 67% increase since 2019*. The research shows continuing positive sentiment for the industry with strong levels of revenue and a robust development pipeline. Despite a small drop in occupancy rates across the continent, rental returns increased by 2% on average to €296.53 per sq m. Portugal, Spain, the Netherlands, Germany and Belgium all recorded increases of over 5% indicating a high demand for self storage in these regions.
Investor appetite in the self storage market remains strong, with year-on-year increases in capital deployed since 2020 and a wide range of investor types seeking to capitalise on the opportunities available. Some significant sales this year have demonstrated that portfolios with quality product continue to earn attractive sale prices.
The volume of equity and debt entering the market has resulted in a larger development pipeline than last year. A total of 262 projects were recorded as in the planning stage or under construction. There remains a strong pipeline for new stores, particularly in the Northwestern European countries. There is also an increase in small micro stores spreading out from Austria and Germany, bringing self storage closer to where consumers live.
There remains an untapped market of people unaware of the potential benefits of self storage across Europe. In most markets, less than a third of consumers understand self storage, which presents a significant opportunity. By utilising public marketing and online campaigns, the industry can target those consumers not currently considering self storage.
FEDESSA’s and CBRE’s research shows that there has been increased investment in existing stores in response to technological changes and sustainability improvements. With new technology such as electronic locks, advanced monitored security systems and access control, some operators are modernising their stores to obtain an advantage over competitors. Simple PIN access systems are being replaced with two-factor authentication through mobile devices to provide more security. Other changes such as LED lighting and the installation of solar power generation are lowering energy costs and improving ESG credentials for businesses.
Approximately 69% of survey respondents stated they are planning to use Artificial Intelligence (AI) in their business in 2024. AI-driven analytics are being implemented to analyse large datasets, adjust pricing in real-time according to demand fluctuations, and interact with customers. It is likely that the share of operators using AI will increase as the ability to access and analyse large quantities of data will become invaluable, and increasingly change the way operators interact with consumers.
Oliver Close, Senior Director in CBRE’s Operational Real Estate team, said: “The self storage industry continues to perform well with strong levels of revenue against a backdrop of long-term market growth, on both the demand and supply sides. Investors are recognising the lucrative opportunities available, and with a robust development pipeline we can expect to see an influx of new stores across the continent.”
Rennie Schafer, CEO of FEDESSA, added: “The findings of our survey show continued high demand for self storage across Europe and increased rental returns in key markets. In addition to new developments, we are seeing increased investment in existing stores in response to technological changes and sustainability improvements.”
The 2024 European Self Storage Industry Report analysed responses from 129 self storage operators, representing 1,816 stores from 17 countries across continental Europe, focusing on the key themes that are impacting the industry.
*According to the FEDESSA European Self Storage Survey 2019
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