While many other property-based industries have seen rents and occupancy hit by the impact of COVD-19, the self storage industry has seen growth in both revenue and occupancy.
Based on Q3 results, the Self Storage Association UK reports that the industry has increased occupancy by 2.9 points year-on-year to 79.2%, while also increasing the return per square foot on storage space by over 1.5% to £23.46. Non-payment of storage fees has also remained basically stable year-on-year, with less than 1.5% of storage fees being overdue at 30 days. In fact, the lockdowns have moved more customers to direct debit and other automated payments, as self storage stores encourage non-contact and cashless systems.
The diversity of people using self storage has meant the industry has not had large numbers of move outs because of COVID-19. There was an increase in move outs at the completion of the first lockdown, but this was mostly pent-up demand due to customers inability to move out during the initial lockdown travel restrictions. Move in levels were also up post lockdown, and by July the industry was above the pre-COVID-19 occupancy levels. Enquiry levels have also been at record levels as people, uncertain about their future, are looking to see if self storage can help with their storage needs, whether that be commercial or private use. Early data from the current lockdown indicates it has had limited, if any, impact on the industry with enquiry rates still high.
Rennie Schafer, the CEO of the Self Storage Association said, ”People often come to self storage during life changing moments: the birth of a child, moving house, a death in the family, entering or leaving a new relationship. All this is continuing during the pandemic, and in some cases, such as use by people renovating their houses, has increased. Commercial enquiries have also increased as people make space for social distancing in shops and cafes, more people move to online sales and on-hand stock levels are being increased due to increasing import times. Self storage stores have implemented social distancing and vigorous cleaning procedures to keep customers safe during the pandemic. Many have also moved to more automated and online systems to minimise contact between customers and staff within stores.”
The major listed self storage companies have performed above the industry average as indicated in their most recent financial statements. Shurgard reported on its third-quarter results to September 30 with an operating revenue growth of 5.2% for the 9 months and a 1.4 ppt increase in like-for-like occupancy. Marc Oursin, Shurgard CEO said, “The fourth quarter of 2020 is starting to see, in all the countries in which we operate, additional measures to mitigate the spread of COVID-19. These new constraints are not impacting our operations for the time being. Therefore, we confirm our revenue growth guidance for 2020 with a 4% to 6% growth versus last year.”
Safestore released their end of year figures to the end of October showing a 6.9% increase in revenue and a 2.5-point increase in occupancy. Frederic Vecchioli, Safestore's CEO commented: “Despite the pandemic, the Group's business model demonstrated its resilience resulting in another strong performance for the year. All geographies have performed well, and the UK business has shown particularly pleasing momentum, growing like-for-like occupancy by 4.2 ppts to 81.0% at the end of the year.”
In their half year report to September 30, Big Yellow reported a 2.3% increase in revenue and a like-for-like occupancy increase of 6.6 ppts from 1 April 2020. Nicholas Vetch, Executive Chairman said, "This pandemic has accelerated many structural changes that were already occurring, such as the move to online retailing and an increase in working from home, facilitated by technological advances. These developments combined with the shortage of quality, flexible, mini-warehousing space, particularly in London, is helping to drive our demand, and we believe these are long-term trends."
The coming 12 months remains full of uncertainty. However, all indications are that demand for self storage will continue to grow and the industry will remain in a strong position. Changes in the commercial real estate market, because of the pandemic, could provide more opportunity for the development of new stores, which has not shown any signs of slowing. All the major operators have a strong pipeline of development which they remain committed to. This development is not just in the South. Surestore, who are a preferred developer for several institutions including Legal and General, recently announced plans to open a further ten sites by the end of 2021, most of which will be in the North.
Photos: Rennie Schafer.
Major listed self storage companies.