JLL analyses self-storage market

Advisory firm JLL, in co-operation with FEDESSA, analysed both the European and Polish markets for self-storage objects – self-service mini-warehouses for lease that offers space ranging from 1 to 10 sqm.

The European self-storage market continues its rapid development. There is currently a total of 8.7 million sqm in 3,200 facilities developed throughout Europe. In Poland, the segment’s development is in its early stages. Nonetheless, it already indicates great potential for growth.

Jan Jakub Zombirt, Associate Director, Strategic Consulting, JLL

“The most developed and mature market is the UK, where nearly 44% of Europe’s existing facilities are located, followed by France and Spain which each account for an 11% share. The rising popularity of the market is reflected by the average occupancy rates, which in 2017 stood at 81% across Europe as a whole with the highest levels seen in Hungary, Ireland, Belgium and Denmark, where approximately 90% of stock was leased”, said Jan Jakub Zombirt, Associate Director, Strategic Consulting, JLL.

Demand for self-storage warehouses in Europe is propelled mainly by private individuals who are responsible for 73% of the leasing of such objects in 2017. In Spain, the UK and Ireland this share is closer to 60%, whilst in the Nordic markets – in Finland, Denmark and Sweden – the figure is nearly 80%.

Poland starts to recognize the advantages of mini-warehouses

Poland’s self-storage market is still in its infancy, with the first modern projects having opened in 2010-2011. Most modern self-storage warehouses are found in the major metropolitan areas, with Warsaw being one of the most popular locations. Other cities where self-storage facilities are located include Poznań, Wrocław, Szczecin, Sosnowiec, Katowice and Lublin. In Poland only a few operators offer self-storage services. Three operators – Less Mess, Kangu and Stokado – are owners of more than one project. In addition to a small number of specialized self-storage operators active in Poland, numerous removals/moving companies and other private companies also offer basic storage services; however, it usually is not a separately standardized product and it differs from modern self-storage units in terms of quality.

“The demand is driven by the growing level of urbanization,” said Zombirt.

Lease level in Warsaw is 90%

Despite the fact that the offer is relatively small in Poland, the biggest network on the market are still able to ensure top-tier standards of leasing. Self-storage units meet the expectations of both private and business customers. This sector’s existing space is nearly entirely leased (60% of lease is attributable to business customers).

“Established self-storage projects located in Warsaw, which have been operating for longer than two years are currently 90% leased. However, the average for Poland is 61%, mainly due to new projects appearing on the market. It is estimated that average occupancy rates in regional cities are slightly lower, which can be put down to less awareness of self-storage products and the on-going development of the market. What is interesting is that self-storage take-up is characterized by a relatively low tenant churn, as only an average of 100–300 sqm is subject to lease expiry or a new agreement in a single month”, says Zombirt.

Why are Poles increasingly using mini-warehouses? The main rationale behind the renting of a unit include storing archives or private goods, short-term storage of furniture during removals and seasonal storage of sports equipment, motorbikes or even cars.

“The demand is driven by the growing level of urbanization. A higher percentage of people living in cities puts more pressure on urban space and, as a result, increases property prices while reducing living spaces. This is accompanied by growing migration – both foreign and domestic. The main drivers of migration are education, work and family-related reasons. Of course, Poland’s improving living standards mean higher expenditure and more items to store safely and securely. Modern mini-warehouses address such needs and offer amenities such as advanced security systems, air-conditioning and round-the-clock access”, adds Zombirt.

Another factor that contributes to increased demand for self-storage units is the growing number of start-ups and e-commerce businesses, which may need small storage units to operate.

Rents

Rents in Warsaw are approximately 80–130 PLN net per month for a unit of 1 sq m. The cost of renting a 3-sqm unit is on average 240 PLN net per month. Similar prices as those in Warsaw are found in Poznań, Wrocław and Katowice, with slightly higher prices in Poznań (an average of 100 PLN net/sqm/month). Rents in Sosnowiec and Lublin are noticeably lower, starting from 65 PLN net/month for a 1-sqm unit. In comparison, the average rent in Europe is €21.5/sq m/month.

“It is expected that there will be further growth in the Polish market, with new projects opening in Poland’s major metropolitan areas and other regional cities with more than 200,000 inhabitants. New operators are expected to appear as the market matures. One should also note that self-storage facility portfolios will become an attractive investment product, as has happened in other, more mature markets,” comments Tomasz Puch, Head of Office and Industrial Investment, JLL.

Source: JLL Poland

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