CBRE: self storage performs well, is in demand across Europe

Self storage continues to be in demand across Europe and represents a good opportunity for investors and developers, according to a new report from the Federation of European Self Storage Associations (Fedessa) and CBRE.

“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”, said Oliver Close, Senior Director Operational Real Estate Team, CBRE. “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.”

According to the report, which covers 19 European countries, the continent’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. Despite a small drop in occupancy rates across the continent, rental returns increased by 2% on average. 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.

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 and an increase in small micro stores spreading out from Austria and Germany, bringing self storage closer to where consumers live.

The report 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.

“The findings of our survey show continued high demand for self storage across Europe and increased rental returns in key markets”, said Rennie Schafer, CEO, Fedessa. “In addition to new developments, we are seeing increased investment in existing stores in response to technological changes and sustainability improvements.”