Skip to main content
TOOLS
Login to access your documents and resources.
Welcome to Nuveen
Select your preferred site so we can tailor your experience.
Select Region...
  • Americas
  • Asia Pacific
  • Europe, Middle East, Africa
location select
Select Location...
  • Canada
  • Latin America
  • United States
  • Australia
  • Hong Kong
  • Japan
  • Mainland China
  • Malaysia
  • New Zealand
  • Singapore
  • Taiwan
  • Thailand
  • Other
  • Austria
  • Belgium
  • Denmark
  • Finland
  • France
  • Germany
  • Ireland
  • Italy
  • Luxembourg
  • Middle East
  • Netherlands
  • Norway
  • Spain
  • Sweden
  • Switzerland
  • United Kingdom
  • Other
location select
Institutional Investor
  • Institutional Investor
  • Individual Investor
  • Financial Professional
  • Global Cities REIT (GCREIT)
  • Green Capital
  • Private Capital Income Fund (PCAP)
location select
Real estate

Self-storage: creating its own market

Stefan Wundrak
Head of Research, Real Estate, Europe
Storage units

With retail and more recently offices falling out of favour with many investors, all eyes are on alternative property types. Among the most popular is self-storage, though as with any opportunity, a key consideration should be to separate the hype from the substance – or at least cyclical from structural drivers.

Self-storage has benefitted from both over recent years: While more consumers and small businesses became aware of self-storage and increasingly started using it, the sector also benefited from the cyclical forces of post-COVID activity, not least on housing markets. But does the opportunity go beyond the here and now? And are European markets equipped for self-storage?

Self-storage: U.S. versus Europe

Extrapolating the trends from the U.S. self-storage story suggests the European market could see potential growth opportunities. The key argument points to provision rates compared with the U.S. Over the Atlantic, supply of self-storage space is approaching 600 sq m per 1000 population, while Western Europe ranges between 4 sq m in Italy and 79 sq m in the U.K., with an average around 35 sq m1.

The U.S. self-storage market has a balanced model of supply and demand. In Europe, both supply and demand are a work in progress, with the fundamentals of storage space providing a compelling growth opportunity. There are two differences to consider, rental pricing (average per sq m per month in the U.S. is €17 compared to €28 in Europe2) and the amount of goods households own (retail sales per capita are about €17,000 in the U.S. versus €11,000 across Germany, France and the U.K.3) Adjusting for these factors supporting U.S. self-storage, and acknowledging U.S. consumerism has been exported almost globally, it appears that self-storage in Europe should have scope for growth.

The industry has considered the differences of self-storage fundamentals within Europe to determine the relative market potential of self-storage. Events such as moving house, divorce, death or migration were identified as the main entry points for consumers into the sector. While these can fluctuate over time and vary across countries, it is accepted that these recurring life events create inelastic demand for self-storage, regardless of region or business cycle.

However, another factor is that, unlike the U.S., self-storage in Europe is an unknown space for many consumers.

Breaking through

A survey from the Federation of European Self Storage Associations (Figure 1) showed that in less developed markets like Spain, almost half of survey respondents had never heard of self-storage. While in the U.K., where self-storage was introduced at some scale in the 1990s, only 9% of consumers are unaware of self-storage services existing.

Some markets, such as Sweden, have caught up with the U.K. and more established brand names have been able to push their message deeper into public consciousness. That means self-storage companies have had to, and can, successfully create their own market.

Brands with sizeable portfolios can make an impact across a country, but it takes time to build as consumers must discover a service they did not previously know they needed. The top three European players have a market share of just 10% and the top 20 of barely 25%, which means consolidation might be needed to spur growth, increasing the presence and awareness of leading self-storage services as a result1.

The circle of proptech disruption

European self-storage in its infancy

Figure 1 can serve as a signpost for how much dormant storage demand could be awakened. Four out of five U.K. respondents are aware of self-storage, and more than half of these claim they know it reasonably well. But most of these are not using it or have only used it for a short period of time. This is a reminder that cultural differences between the U.S. and Europe are alive and well and means that European self-storage is on a different trajectory.

As for the cyclical story, self-storage is going through a rough patch like all real estate in a weaker economy as the effects of higher interest rates and inflation continues to be felt. But self-storage rents are still growing. The sector is chronically undersupplied and benefits from the fact that life events, which trigger the need for storage, are happening with a regularity unrelated to the business cycle.

Negative effects like weaker housing market activity can be partly offset by a rise of households downsizing. In Europe, the structural momentum of self-storage crowds out most of the potentially negative cyclical factors. This contrasts with the mature U.S. markets where asking rents have fallen by around 30% in this cycle so far, while Europe only recorded slower growth and marginally lower occupancy rates.

Challenges and opportunities

Europe has vastly different challenges to contend with compared with the U.S. Not only must the self-storage players become more visible in Europe; they must also find ways to expand storage space capabilities in an area with considerably less land mass than the U.S., be that by sector consolidation or through other means.

Despite the challenges, the drivers of user demand in Europe – non-cyclical life events – are the same as those in the U.S. While the U.S. self-storage market has now matured, becoming exposed to the same business cycles as other real estate sectors, the non-cyclical demands in the infant European market means self-storage offers diversification.

The evolution of the European self-storage market will take time, with some regions needing longer than others, though the drivers spurring self-storage are unlikely to change.

Partnering with a manager that has a proven track record within the self-storage sector is one way of entering this burgeoning market. An experienced manager may have the ability to identify how European self-storage not only differs from the U.S., but the intricacies between European markets, tapping into these factors as the portfolio characteristics that the younger European self-storage space can provide.

Related articles
Real estate Storage likely to remain an outperformer
Melissa Reagen sat down with IREI for an exclusive discussion on the ongoing lifecycle changes that have created persistent demand drivers for households needing self-storage.
Real estate Now is the time for commercial real estate debt
Jack Gay discusses why he believes now is the time to invest in commercial real estate debt
Real estate Nuveen strives to preserve and enhance affordability through impact investing
Nadir Settles and Pamela West sit down with Commercial Observer and discuss the success of the sector and the effects impact investing has on the residents, community and investors.
Contact us
Our offices
London skyline
London
201 Bishopsgate, London, United Kingdom

1 Source: Fedessa, 2023

2 Source: Nuveen Real Estate, 2024

3 Source: Oxford Economics, 2024

The views and opinions expressed are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions, legal and regulatory developments, additional risks and uncertainties and may not come to pass. This material may contain “forward-looking” information that is not purely historical in nature.

Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. Any changes to assumptions that may have been made in preparing this material could have a material impact on the information presented herein by way of example. Performance data shown represents past performance and does not predict or guarantee future results. Investing involves risk; principal loss is possible.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. For term definitions and index descriptions, please access the glossary on nuveen.com. Please note, it is not possible to invest directly in an index.

Important information on risk

All investments carry a certain degree of risk and there is no assurance that an investment will provide positive performance over any period of time. Equity investing involves risk. Investments are also subject to political, currency and regulatory risks. Diversification is a technique to help reduce risk. There is no guarantee that diversification will protect against a loss of income. Debt or fixed income securities are subject to market risk, credit risk, interest rate risk, call risk, derivatives risk, dollar roll transaction risk, and income risk. As interest rates rise, bond prices fall. Foreign investments involve additional risks, including currency fluctuation, political and economic instability, lack of liquidity, and differing legal and accounting standards. These risks are magnified in emerging markets.

As an asset class, real assets are less developed, more illiquid, and less transparent compared to traditional asset classes. Investments will be subject to risks generally associated with the ownership of real estate-related assets and foreign investing, including changes in economic conditions, currency values, environmental risks, the cost of and ability to obtain insurance, and risks related to leasing of properties. Real estate investments are subject to various risks, including fluctuations in property values, higher expenses or lower income than expected, and potential environmental problems and liability. Please consider all risks carefully prior to investing in any particular strategy. A portfolio’s concentration in the real estate sector makes it subject to greater risk and volatility than other portfolios that are more diversified and its value may be substantially affected by economic events in the real estate industry. International investing involves risks, including risks related to foreign currency, limited liquidity particularly where the underlying asset comprises real estate, less government regulation in some jurisdictions, and the possibility of substantial volatility due to adverse political, economic or other developments. As an asset class, agricultural investments are less developed, more illiquid, and less transparent compared to traditional asset classes. Agricultural investments will be subject to risks generally associated with the ownership of real estate-related assets, including changes in economic conditions, environmental risks, the cost of and ability to obtain insurance, and risks related to leasing of properties.

Investors should be aware that alternative investments including private equity and private debt are speculative, subject to substantial risks including the risks associated with limited liquidity, the use of leverage, short sales and concentrated investments and may involve complex tax structures and investment strategies. Alternative investments may be illiquid, there may be no liquid secondary market or ready purchasers for such securities, they may not be required to provide periodic pricing or valuation information to investors, there may be delays in distributing tax information to investors, they are not subject to the same regulatory requirements as other types of pooled investment vehicles, and they may be subject to high fees and expenses, which will reduce profits. Alternative investments are not appropriate for all investors and should not constitute an entire investment program. Investors may lose all or substantially all of the capital invested. The historical returns achieved by alternative asset vehicles is not a prediction of future performance or a guarantee of future results, and there can be no assurance that comparable returns will be achieved by any strategy.

Nuveen, LLC provides investment services through its investment specialists.

This information does not constitute investment research as defined under MiFID.

Back to Top