Stockholm Berlin Amsterdam Helsingborg Survival Skills Milan

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1 Stockholm Berlin Amsterdam Helsingborg Survival Skills Europe s self storage industry is bucking economic headwinds while eyeing potential. Milan By Mark Wright After several very difficult years of recession, Europe s self storage landscape could be littered with out-of-business casualties and dispirited operators. It s not. In fact, surviving this down economy has shown the resilience and promise of self storage in Europe. The clouds have yet to lift, however, with banks still reluctant to lend especially across borders and consumers slow to spend saw a number of smaller companies joining the industry more than in previous times. Rodney Walker Secretary General, FEDESSA The ability of potential operators to borrow money from banks has become much more difficult, said Rodney Walker, CBE, secretary general of the Federation of European Self Storage Associations (FEDESSA). FEDESSA has 14 member associations, most of which are run by volunteers. The member nations include Belgium, The Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Norway, Spain, Sweden, Switzerland, The Netherlands and the United Kingdom. FEDESSA is also in direct contact with operators and potential operators in several other European countries, explained Walker, such as Austria, Cyprus, Estonia, Hungary, Iceland, Latvia, Poland, Portugal, Russia, and Romania, most of whom are members of current national associations. He said Ireland and The Netherlands have been affected by stagnation in their housing markets, but the Scandinavian See FEDESSA, page 10 PAGE 8 ssa GLOBE JUNE 2012

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3 FEDESSA, from page 8 countries have not suffered so much from recession and thus have seen growth, particularly in Sweden. While Sweden is a bright spot, agrees Michael Fogelberg, CEO of SelStor AB and FEDESSA president, that country is nonetheless struggling on the banking side. It is hard to get financing for new development. Growth, wherever it can be found in Europe, has typically been in the form of conversions of existing buildings versus new construction, both men said. Member Countries in FEDESSA Belgium The Czech Republic Denmark Finland France Germany Ireland Italy Opportunities are constrained by financial markets, said Fogelberg. That s the biggest issue. Young but Growing Walker said that FEDESSA estimates the total number of self storage facilities in Europe at about 1,650, with around 1,175 (or about 70-percent) of those facilities represented through FEDESSA member associations. He said SSA U.K. is the largest of the European associations, with approximately 550 members out of an estimated 815 total facilities in the country. Companies with more than Norway eight facilities tend to dominate the marketplace, noted Spain Walker, although independent mom-and-pops are Sweden strong in the U.K., important in France, Norway and Switzerland Spain, and starting to show in Germany. In the U.K., The Netherlands 36-percent of facilities are owned by the seven largest United Kingdom operators. But the momand-pops are probably about 90-percent of the industry by company. The French market is seeing some expansion with the entry of a number of small operators. He identified Shurgard, Safestore, Big Yellow, Homebox, and Access as the five largest storage operators in Europe ranked by number of facilities. Despite the economic hurdles, Walker said, 2011 saw a number of smaller companies joining the industry more than in previous times. Growing pains aside, self storage in Europe is very young compared to the U.S. and Canada. The industry started here in the late 1980s, and only started to get any real quantity of facilities 10 to 12 years ago, Fogelberg observed. He said market penetration in the U.K., for example, is under one-tenth of the United States. Germany is less, with about 80 facilities for 80 million people. Sweden is lower still, with about 80 facilities for 90 million people. And Poland has only one or two facilities for its population of 40 million. Every time we open a new facility it fills up, said Fogelberg, but one has to do it right. He noted that while the U.S. and European markets share a lot of similarities, they also have their differences. For one thing, Americans tend to move around more. Self storage prices are higher in Europe than in the U.S., even aside from currency differences. And European facilities tend to be located much more in cities, while America has a greater concentration in suburban areas. One has to realize Europe isn t united, said Fogelberg. The investment picture is more complex you have lots of different countries with differences in their markets. There are financial differences, currency issues, so it s tough to talk about Europe as a whole. Banks are much more careful. Each country has its own specific issues self storage companies have to deal with, including permitting and financial issues. There are lots of hurdles and challenges. Opportunity is there but you need to know your market. Once the obstacles of getting to market are overcome, though, the actual self storage customer is very similar to his U.S. counterpart, both Walker and Fogelberg noted. Traditionally in the U.K. and I am sure it is true across Europe 70-percent of the customers by number have Opportunities are constrained by financial markets. That s the biggest issue. Michael Fogelberg President, FEDESSA See FEDESSA, page 12 PAGE 10 ssa GLOBE JUNE 2012

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5 FEDESSA, from page 10 been private individuals, said Walker. However, during the last three years we have seen the proportion changing slightly and our latest estimate in the U.K. is that around 61-percent of the customers are private individuals, hence indicating an increasing use by businesses. Our business customers include start-ups and those who wish to store goods to make them easily accessible for sales, travelling salespeople, conference organizers and others. The average length of stay for individuals has dropped a little to 37 weeks, and for businesses has increased a little to about 60 weeks. Walker said the U.K. government has tentatively decided to impose a new Value Added Tax on all self storage beginning in October Fogelberg sees Sweden as pretty identical to the U.S. market, with a commercial sector, movers, etc. The Swedish market has developed quite rapidly. Awareness of Shurgard is big, particularly in Stockholm where 91-percent are aware of the Shurgard brand. That s one of the highest levels in Europe, but they had 20 facilities in Stockholm. It s possible people know the brand but might not be customers. FEDESSA will host a combined European and UK 2012 conference and trade show September 12 13, in Budapest, Hungary, a week after the SSA (US) Fall Conference & Trade Show (September 5 7 in Las Vegas, Nevada). SSA is pleased to be affiliated with FEDESSA and its member nations, said SSA president and CEO Michael Scanlon. I appreciated the chance to speak at FEDESSA s Paris conference and value exchanges of information that help operators and vendors grow their businesses. We welcome any European owner/operators who wish to join the SSA (US) to learn about best practices and our extensive list of vendor products and services. v PAGE 12 ssa GLOBE JUNE 2012