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Self Storage: An Investment Choice Rising In Popularity

Posted: 11 January 2019

Self Storage Investment

Real estate has long since been a popular choice for investors, yet self storage is one area in real estate that is often overlooked. While the rest of the real estate market can be challenging and crowded at times, the self storage industry is growing, presenting investors with an unlikely investment alternative.

Self storage gives entrepreneurs, real estate owners and investors the opportunity to confidently diversify their investments. As a result, it has created a dynamic, resilient and flourishing industry – regardless of the strength of the economy.

A Thriving Industry

Self storage in the UK is growing and is reflected in the following statistics: 

  • There are an estimated 1 505 self storage facilities in the UK.
  • These facilities cover a total of 44.6 million square feet of rentable space.
  • There approximately 370 storage operators.
  • These operators work in approximately 482 locations around the UK.

Self storage is an evolving asset class when compared to real estate asset classes such as office, commercial and industrial.

Self storage is an alternative investment for both active and passive investors, and is considered to be a safe real estate asset type as it holds many robust characteristics. Self storage companies can typically expect consistent cash flows and tend to produce double digit returns annually. Therefore, investors tend to hold out longer with their investments as they know they’ll always receive steady returns.

The ‘Recession-Proof’ Investment

The self storage sector contains strong attributes to the extent that it often performs better during a recession, fondly labelling the industry as ‘recession-proof’. For example, during the 2008 financial crisis, self storage was the only real estate equity trust that recorded positive returns.

Self storage facilities only require 40-45% occupancy rate in order to break-even, which is a lot lower than other asset classes and is known to recover faster in comparison. As a result, profit is often yielded a lot easier.

Self storage facilities have undergone tremendous changes since they first began to operate. Their attractiveness has increased as a result. These facilities have improved their security measures, are situated in convenient locations, come in a variety of shapes and sizes and are often monitored with surveillance cameras 24/7.

Self storage units are no longer only for households to store extra belongings, but they have expanded into new markets where businesses are utilising self storage units to help them grow. This reduces overhead costs, especially for smaller businesses. Businesses also find that they have more freedom using self storage units as opposed to leasing out bigger office spaces.

Self storage facilities are expanding in their current markets as well as entering new ones. The self storage industry’s growth in versality, improvement in aesthetic appeal and demonstration of resilience are just a few key indicators of the industry’s success as an unlikely, but promising investment alternative.

Storage King is one of the UK’s top self storage brands, offering convenient and secure self storage for household, business and student storage needs. Contact us on 0800 0852 954 for more information on renting a self storage unit.

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