Self-storage could be next service to rocket in price due to Covid as home movers drive up rents


Self-storage units could be the next commodity to rocket in price thanks to the pandemic, as home movers and growing online businesses have pushed occupancy to record levels. 

The use of self-storage units, which operate under brands such as Big Yellow, Safestore and Shurgard, has reached an all-time high according to a new report. 

In total, 82 per cent of space in the warehouses was occupied in 2020: a six per cent leap annually and an increase of nearly a fifth in the past decade.  

Self-storage facilities have been in greater demand since the pandemic started, because people have moved house, made room for home offices and started small businesses

Self-storage facilities have been in greater demand since the pandemic started, because people have moved house, made room for home offices and started small businesses

With this new demand during the pandemic, rents are also rising much more quickly than they have done previously, according to the report by the Self Storage Association and commercial property agent Cushman & Wakefield. 

One customer who renovated her home during the pandemic told This is Money the cost of storing her belongings had quadrupled, and the rising rents could also hit the small businesses who use them store their products.  

Self-storage units are usually rented out on a pounds per square foot basis, and typically range from lockers of just a few square feet up to more than 1,000 sqft – roughly the size of a three-bedroom house. 

Larger units are often occupied by small businesses, typically those which sell products online and need somewhere to keep their stock. 

Average rental rate moves had been within a range of less than 50p for the past five years,  but there was an increase of 86p per square foot this year, excluding VAT. 

The average cost per square foot per year is now just short of £24. 

The average self-storage unit is between 10 and 100 square feet, meaning a cost of between £239 and £2,394 per year. 

Compared to last year’s average cost, this would see them paying nearly £100 more for a 100 sq ft unit than they would have last year, and £430 more than they would have in 2013. 

The typical customer occupies a self-storage locker of up to 200 sq ft, while small businesses often use larger spaces and therefore could be hit harder by rising rents

The typical customer occupies a self-storage locker of up to 200 sq ft, while small businesses often use larger spaces and therefore could be hit harder by rising rents 

But it’s business owners that will see the largest increase, with the average cost of a 500 square foot unit going up more than £400 in a year to £11,970. 

However, the costs of storage varies widely. The amount you would pay to store your things in a purpose-built facility that has 24-hour access would be much higher than with a smaller storage provider who might use shipping containers. 

For example, at the moment, a 100 sq ft unit with one of the household name providers in Greater London would cost around £60 per week or £3,240 per year: nearly £1,000 more than the average stated in the report.  

The cost is also becoming more out of kilter with the average disposable income. 

The gap between self-storage costs and average disposable income is widening

The gap between self-storage costs and average disposable income is widening 

Among non-business customers, the reasons for using self storage were largely focused on home moves or renovations, or important life events

Among non-business customers, the reasons for using self storage were largely focused on home moves or renovations, or important life events 

For those renting bigger spaces, such as small businesses, the extra costs could easily run into the thousands.  

However, some customers say they have already seen much higher increases as warehouse owners look to take advantage of the spike in demand. 

Laura Gibson, 40, who runs communications agency Calverton, told This is Money she has seen the bill for her unit in her home town of Tunbridge Wells in Kent almost quadruple following the pandemic. 

‘We took self-storage when we moved out of our house which was being renovated pre-Covid. 

‘As a new customer, we were given a brilliant deal of around £60 a month for a sizeable space for the first three months, to store belongings that would not fit in a two-bedroom rental with two adults and two kids,’ she says. 

‘We now have moved back into our renovated house and still seem to need the storage unit as we don’t want to clutter our new space. 

‘However, we are now paying well over £200 a month for the same space due to the upsurge in demand over the last 12 months and we are now hastily trying to dump stuff because it’s just not cost-efficient anymore.’

Charles Rickards, marketing and finance director for South West-based removals and self-storage firm The Master Removers Group, says his facilities are currently at full capacity.

‘We offer self-storage in Bath and Gillingham, and both are currently full due to exceptional demand from people moving house. There are waiting lists for as soon as a unit becomes free,’ he says. 

‘The stamp duty holiday in particular is behind this surge in demand; we are seeing many people selling their homes for as high a price as possible while they can, and moving into rented accommodation while they find a property to buy. In the meantime, they are putting their belongings into storage – assuming they can find some, that is. 

‘Some of the big self-storage firms will get you through the door with a great offer, only to substantially increase the price down the line. We often get calls from people who want to move out of those facilities because the price has gone up so much and they can no longer afford it.’

The report also quizzed people about their reasons for using self-storage.  

Moving to a new house was the most popular reason, as more than a third of domestic customers used self storage for reasons associated with moving home. 

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De-cluttering to create more space was cited as a reason by more than one in ten users, perhaps because of the need to make room for working from home or home schooling.

The owners of self-storage companies were optimistic about their profits following the pandemic-fuelled increase in customer demand

The owners of self-storage companies were optimistic about their profits following the pandemic-fuelled increase in customer demand

Rennie Schafer, chief executive, of the Self Storage Association, said: ‘Once again the industry has shown its resilience to economic and political disruption, increasing occupancy to the highest levels on record. 

‘Throughout the pandemic self storage has been providing a valuable service to a range of customers, from online retailers to healthcare providers and people making space for working from home or home schooling.’

An opportunity for investors? 

It might be bad news for those needing to store their belongings, but the self-storage boom is reaping rewards for investors. 

Industry turnover is up 16 per cent annually to £890million, according to the Self Storage Association report. 

‘The strong fundamentals of the sector, along with its resilience during the pandemic has made self storage very appealing to investors,’ the report said. 

‘Along with more traditional investors, we are seeing a greater number of high-profile institutional funds and private equity houses looking to diversify away from more traditional asset classes due to the pandemic. 

‘The resultant significant increase in demand, coupled with restricted supply, has had a positive impact on pricing.’  

Today, FTSE 250-listed Big Yellow, the largest operator in the self-storage sector reported its pre-tax profit jumped 185 per cent to £265.8million in the year to 31 March.

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