Unpacking potential: The case for self-storage

The self-storage sector, an evolving part of the real estate market, provides flexible storage solutions for households, small businesses, and larger corporations. Global demand has continued to grow, largely due to continued drivers linked with events in people’s lives and longer-term demographic tailwinds. Large regional differences exist, however.

The demand for self-storage is underpinned by a combination of consistent structural drivers known as the ‘5 Ds’ as well as long-term tailwinds reflecting broader demographic and economic trends.

Demographic shifts (‘5 Ds’): Demand is primarily influenced by Divorce, Death, Downsizing, Dislocation, and Disasters, especially affecting individuals aged 25-34 and 79+, who experience frequent relocations and space constraints. 

Urbanisation and smaller living spaces: Rising urbanisation (UK: 85% versus a developed world average of 79.7%)[1] and smaller homes (average UK home size: 76 sqm compared to 201 sqm in the US)[2] contribute to higher demand for storage, particularly among younger renters with limited space.

E-commerce & business use: Small and medium-sized enterprises (SMEs) leverage self-storage for cost-effective inventory management and fulfilment. We believe this will be supported as e-commerce keeps growing, with UK online retail forecasted to rise to 28.6% of total sales by 2027[3]. 

Housing market: Home sale activity has been demonstrated to have strong correlation with self-storage demand and rental growth. As home sale activity picks up, moves in rent growth follows suit, and vice versa. Studies show that 40%-60% of the variation in both REIT-level and national-level year-on-year rental growth can be attributed to changes in existing home sales[4].

Global differences in self-storage: UK, US, and Europe

The self-storage market shows distinct characteristics across the UK, US, and Europe, each shaped by unique levels of market maturity and demand drivers.

The US leads with 6.3 sq ft of self-storage per capita[5], reflecting its well-established role in American lifestyles, with 11.1% of households renting units[6] (versus 3% in the UK)[7]. In the past four years, inventory grew by 13.6%[8], leading to some regional saturation, particularly in Sun Belt metros, where rapid facility growth during COVID pressured occupancy and rents. The market is dominated by large operators, with many high-profile acquisitions over the last 12 months – led by the largest players such as Public Storage and U-Haul – indicating further consolidation in the sector.

In the UK and Europe, awareness is growing, though misconceptions about cost and utility persist, particularly within continental Europe where ~40% of the population have never heard of self-storage and often overestimate the cost[9]. The UK offers 0.89 sq ft per capita, while major European markets like France, Germany, and Spain range from 0.2 to 0.5 sq ft[10]. This reflects differences in both urbanisation and attitudes towards housing and storage, but generally we see higher uptake in densely populated areas with smaller homes. We are seeing investors increasingly viewing Europe as a growth market.

In our view, these key demand drivers and structural tailwinds could potentially allow the sector to offer returns that outpace the all-property averages in the UK and Europe, driven by strong rental growth but also more favourable market dynamics than the US (i.e., via space availability and development regulations limiting supply risk). This combined with the relatively low capex versus all property and most sectors, reflects the cost efficiency of self-storage.

Local differences within UK self-storage

The UK self-storage market includes 2,706 facilities with 60 million sq ft of rentable space, generating £1.1bn in 2023[11]. It remains fragmented, with the ‘Big 5’ operators (e.g., Big Yellow, Safestore, Shurgard) managing 37% of total space [12].

Our analysis of Costar’s dataset, covering 11 million sq ft (roughly 20% of the market) shows 50% of this space is concentrated in London and the South East, while significant development across Manchester, Liverpool, and Birmingham accounts for 14.4% of all space. This clustering raises concerns about future localised market saturation, which could adversely affect occupancy and rental growth. Nine of the 12 highest per capita areas are in London/South East, with Knowsley (located outside Liverpool), leading overall at 1.4 sq ft per capita.

Corporate expansion via acquisitions in these markets – like Shurgard’s purchase of Lok’nStore’s portfolio across London, Manchester and South-East – could deepen supply imbalances if accompanied by the disposal of non-core assets.

Conclusion

Key demand drivers – such as urbanisation, shrinking living spaces, and evolving consumer behaviour – underpin the sector’s growth prospects, while demographic factors collectively known as the ‘5 Ds’ continue to fuel demand. This positions the sector for potential strong, risk-adjusted returns, particularly in the UK and Europe, where it’s expected to outperform all property in the medium term.

The relatively nascent UK and European markets offer opportunities for expansion, especially in underserved urban centres and commuter towns (i.e. certain pockets of the Midlands, Yorkshire and Humber within UK), where demand is driven by high population density and limited living space.

Risks include declining occupancy rates if supply outpaces demand, particularly in markets where construction has increased significantly or where supply is already relatively strong. An uptick in M&A activity and strategic acquisitions, as we have seen in the US, could also exacerbate competition. Although these risks may limit some of the upward pressure on rents, we still see structural tailwinds as very compelling and supportive of income over the long term.

 

[1] United Nations Trade and Development. 2023 Handbook of Statistics.
[2] World Population Review. Country Rankings.
[3] PMA. European Logistics Forecasts. October 2024.
[4] Green Street. Self-Storage Insights: Unpacking the Impact of Home Sale Activity. 
[5] Safestore. Housing Research Note.
[6] SpareFoot. US Self-Storage Industry Statistics, 2024.
[7] Statista. “Real Estate; Share of people who are using or considering using self-storage in the UK”.
[8] Marcus & Millichap. 2024 Self-Storage National Report. 
[9] Fedessa. European Annual Industry  Report 2024.
[10] Safestore. Housing Research Note.
[11] Cushman & Wakefield. 2024 UK Annual Self Storage Report. ​
[12] Cushman & Wakefield. 2024 UK Annual Self Storage Report. ​