Why invest in self-storage?
A self-storage investment may lack the aesthetic kerb appeal of other businesses found around the UK.
However, the wise investor will look past the appearance and style of a business, and instead concentrate on the financial matters and potential returns.
The history of self-storage in the UK goes back to the 1980’s, where the first store opened in London.
Fast forward to 2021, and the latest figures released by SSA UK report an annual turnover of £890 million.
Furthermore, despite numerous financial crashes and recessions since the 1980s, the self-storage industry has defiantly continued to grow.
According to statistics by SSA UK, it estimates that there are over 1900 storage facilities in the UK in 2021.
Additionally, it is reported that in total, there are approximately 49 million sq ft of self-storage space in the UK.
Around 30% of UK self-storage facilities are owned or managed by large operators, who are managing 10 or more sites.
These types of companies generally offer shareholdings, an opportunity to invest at an affordable level based on your circumstances.
Similarly for investment groups, the lure of purchasing freehold land with planning permission for a self-storage facility is considered to yield a good return on investment
There are many reasons why self-storage stacks up as a wise investment, here are five points to consider:
1. Self-storage investment is resilient
Investments in shares come with a roller coaster of dips and rises, while self-storage investments remain in constant growth.
Furthermore, economic conditions tend to have a direct effect on many investments, and some industries are more vulnerable to these changes.
However, self-storage investments have proven to grow through the toughest of economic climates, good news for the longer-term investors.
The UK takes up a whopping 41% share of self-storage usage throughout Europe!
Here at Move and Store Bristol, we have spent many years witnessing customers spend more on one month’s storage than the actual value of the goods being stored.
The sentimental approach comes before money in many people’s lives, and why not?
Business self-storage is an ever-increasing market. Many SME’s are choosing to downsize premises to a more flexible option, with a virtual office and use self-storage containers for business items.
2. Downsizing contributes to a rise in self-storage use
There are several factors to consider where downsizing property can result in the need for using self-storage.
Here are three popular reasons we have experienced helping people with self-storage in Bristol:
Firstly the rates of separation and divorce among couples continue to rise.
When one partner leaves the family home there will likely be a need for self-storage if the person is renting a room temporarily for example.
Secondly, there comes a time when the nest is empty, the children have left home, and downsizing property seems logical.
Many of our customers have found self-storage a useful option when considering what to keep hold of, and what doesn’t fit into the new abode.
Finally, previous customers have built new homes, funded from the sale of a previous property.
As such finding themselves living in a mobile home for 6-12 months while the new home is being built.
For these three scenarios, having a self-storage facility available offers the customer, flexibility, convenience, and security.
3. The millennial generation
Most millennials prefer living in flats or apartments rather than owning a home. Additionally, in many cases, it’s the only realistic option from a financial perspective.
The millennial generation enjoys the convenience, comfort, and flexibility that come with apartment living.
This age group is also fond of having ‘toys’, such as quad bikes, kayaks, and surfboards, all of which require storage.
When looking at 20-34 year olds, statistics show the number of this population living with their parents since 1996 has risen by one-third.
The 20-34 year age group is more likely to search “storage units near me” on Google than any other generation.
4. Ease of maintenance
A big lure for potential investors is that self-storage facilities come with little maintenance, in comparison to other property investments.
Today, there are software apps to assist with the day-to-day operations of your property from virtually anywhere.
The ability to sign documents online allows you to manage your facility without even being on-site.
Furthermore, you can conduct remote check-ins online with many software options available on the market.
This removes the need for a full-time property manager onsite.
5. Accessible Funding
In addition to the great returns that self-storage offers, financing has become much easier to attain due to passive investing opportunities.
Platforms such as the UK Angel Investment Network or and Crowdfunder UK are useful resources to communicate with potential investors.
A carefully presented business plan, with detailed projected ROI, is sure to interest investors when presenting the size and growth of the industry.
Investing in a syndicate deal offers an alternative opportunity to spread the cost of the overall investment.
Instead of buying a rental property alone, investors can pool their money with other investors.
And finally, with self-storage investment comes risk…
Of course, no investment is without risk.
A potential investor is primarily banking on the storage units bringing in consistently high occupancy rates.
If investing in a new self-storage build, you should be confident that the storage facility is in a good location, and that there is a genuine market in that location for self-storage.
Alternatively, if the market does not continue to grow, an investor might find they own a fairly expensive empty space.
It goes with the territory of investing that due diligence is key, with plenty of smartly detailed research.
A finely executed business plan with sound due diligence should find a healthy long-term return for investors.
Always seek sound financial advice before risking capital on self-storage investment.
For further details on self-storage services, fill out our contact form, or give us a call on 01174 50 49 28.
About the author:
Digital Marketing Specialist Kevin Chambers has been supporting SMEs with digital projects since 2006. Enjoys producing engaging content, intermittent fasting, and regular travel. Further details can be found here by visiting his website.