Market Summary

• The sector has demonstrated resilience through 2025 to date, with operators reporting rental growth and solid occupancy, underscoring the strength of the asset class, even in an unsettled macroeconomic environment.

• Performance has shown a slight divergence geographically: the UK has been weighed down by weak GDP growth and subdued housing transactions in 2024, while continental Europe has seen stronger momentum, supported by more favourable economic conditions. This likely also reflects the more competitive nature of the UK market. In contrast, many European markets are in earlier growth phases, with structural undersupply and rising awareness still driving expansion.

• Operators are increasingly adopting new formats such as micro urban sites and hub-and-satellite clusters, allowing the sector to test new tech-enabled models which serve more localised catchment areas. In parallel, professionally operated container storage platforms are also beginning to emerge, extending the sector’s reach even further through alternative models.

• In the UK, rising costs from business rates, national living wage uplifts, and national insurance increases have sharpened the focus on operational efficiency, accelerating the adoption of automation and lean staffing models.

• Investor sentiment was unsettled by tariff-related uncertainty earlier in the year, but the combination of a signed US-EU trade deal, stabilising interest rates, narrowing bid-ask spreads, and sustained demand for modern, well-located facilities is laying the groundwork for renewed transactional and development activity.

OPERATOR PERFORMANCE AND MARKET DYNAMICS

Operators in both the public and private markets are reporting rental growth in most geographies in the UK and Europe. Occupancy levels have been broadly stable in 2025 to date in the UK, but more positive in Europe.

The UK has economically underperformed Europe over the last five years, with a backdrop of sluggish GDP growth and a weak UK housing market. GDP growth underpins business expansion, driving SME formation, inventory building, and project activity, while housing market activity generates moves that create temporary storage demand. UK Self Storage performance has weakened in recent periods relative to Europe. UK GDP in Q2 2025 was 4.5% above its pre-pandemic level (Q4 2019), compared with the euro area’s 6.0% increase over the same period.

For 2025, the European Commission forecasts growth of 0.9% for the euro area and 1.1% for the broader EU, while the Bank of England projects UK growth of around 1.25%. This suggests the UK may slightly outperform its European peers in the near term.

According to Savills Residential Research, a rise in UK residential sales in March, where buyers rushed to benefit from higher property value thresholds ahead of the Stamp Duty Land Tax changes (which took effect in April) has brought rolling annual sales volumes close to 2017–19 levels, with 1.19 million transactions in the 12 months to July 2025, but volumes are expected to settle below the 2017–19 benchmark over the remainder of 2025 and into 2026.

Self Storage operators across the UK and Europe are increasingly adopting new formats, supported by recent advances in sector technology and growing customer acceptance of digitally enabled services.

These formats include urban Self Storage facilities, which are typically sub-5,000 sq ft sites in city centres using a centrally managed model, drive-up facilities, and fully centrally managed / automated stores. We expect to see more hub-and-satellite configurations emerge with a larger, full-service ‘hub’ store and several smaller, semi- or fully automated ‘satellite’ sites in the same catchment. These new product types are enabling expansion into previously underserved locations.

Notably, platforms for container storage are also expanding in the UK. Container storage uses converted shipping containers on industrial estates, edge-of-town plots, or underused land, providing low-cost, drive-up space with minimal capex.

Current market activity suggests that high-quality, modern, premium facilities are performing strongly and are able to out-position older stock in certain markets, potentially creating an increasingly two-tier market for operators and customers, in Savills view.

Operating costs have risen sharply in the UK – the business rates standard multiplier rose from 51.2p to 54.6p in 2024/25 (a 6.6% increase); employer National Insurance contributions increased from 13.8% to 15%, with the threshold lowered from £9,100 to £5,000 in April 2025; and the National Living Wage for workers aged 21+ rose by 6.7%, from £11.44 to £12.21 per hour. These pressures are now easing to some extent and have accelerated the adoption of automation and the reduction in FTEs per store. While technology was already a strategic focus, the current cost environment has made operational efficiency even more of a priority.

We see notable growth and competition in the third-party management market, with ten operators now offering management services in the UK, and the emergence of others in Europe. Savills views this as a positive evolution as the sector matures, improving professionalism, investor choice, and scalability.

INVESTMENT TRENDS AND CAPITAL FLOWS

According to Green Street News, Self Storage was the second most negatively impacted real estate sector in Europe (after hotels) in terms of asset pricing among major REITs, following the announcement of Trump’s ‘liberation day’ tariffs on 2nd April 2025. The tariffs prompted a 35-basis-point downgrade to 2025 euro area GDP growth forecasts, creating uncertainty for investors regarding consumer confidence and spending, as well as their impact on the sector’s near-term performance. Looking ahead, the recent European trade deal with the US, combined with continued interest rate stabilisation, should help underpin a recovery in transaction volumes and asset prices.

New store leasing activity has picked up in 2025, particularly for well-located assets that are fit for purpose and supported by experienced management teams. Additionally, we are seeing strong performances from newly opened stores with evidence of strong rents for prime assets in major cities, and some stores performing strongly through Existing Customer Rent Increases (ECRIs).

Development activity has been constrained by prolonged planning delays and high construction costs in most markets, but we see new build viability improve as construction costs begin to reduce and land availability improves. We see strong development pipelines in the key capital cities in particular, supported by good underlying trading conditions in most markets although red tape in certain markets continues to hamper activity.

There is currently strong liquidity in the market, with bid pricing appearing to narrow, suggesting greater alignment between buyers and sellers. Several sales processes have failed to complete in the past 12 months, including well-publicised transactions such as Access Self Storage, which attracted bids from a number of parties, alongside other portfolio sales. Processes have been unsuccessful for a variety of reasons, including overly optimistic pricing (particularly for older, second-generation assets) and insufficient preparation ahead of marketing. Self Storage’s granular nature makes robust, well-structured data essential to securing competitive bids.

Debt Markets

The wider real estate financing markets are robust, as low investment volumes and limited new deal flow have led to positive supply/demand dynamics for borrowers.

This is also reflected in the UK Self Storage debt market, with lenders attracted to its resilient cash flows, diversified rental base, and relative stability compared to some other real estate sectors. Competition is strongest for larger, stabilised portfolios operated by established platforms, driving attractive pricing and flexible structures, including favourable leverage options for borrowers where banks are comfortable extending leverage up to 60% LTV, and liquidity widely available from alternative lenders at 70% LTV.

Historically, the traditional banks have been focused on the large listed operators, with alternative lenders being the main source of finance for startup operators and developers. As the market has matured, there has been a convergence of lenders available to support the development pipeline of the private operators, with those able to demonstrate track record, robust operating fundamentals, and strong ESG credentials best positioned to secure favourable terms.

Technology and artificial intelligence (AI)

Digital management platforms are reshaping the Self Storage sector, streamlining the customer journey through online booking, payment, and communication tools, while also enabling remote site management and leaner staffing models. Technology-enabled security systems, including smart access controls and digital surveillance, are being widely adopted to enhance operational efficiency and customer confidence.

AI applications are emerging, with operators deploying dynamic pricing algorithms, automated sales targeting, and resource optimisation tools to improve margins and utilisation. AI-powered security is also gaining traction, with smart cameras and anomaly detection being trialled to counter crime at facilities.

Outlook

• Rental growth is expected to continue across most UK and European markets, supported by resilient demand, with occupancy likely to hold steady in the UK and strengthen further in Europe.

• The UK has lagged Europe economically in recent years due to weaker GDP growth and housing activity, which are both important drivers of Self Storage demand. However, near-term forecasts point to a modest improvement in the UK, suggesting the gap with Europe could begin to narrow.

• With operating costs elevated, the sector is expected to prioritise automation, lean staffing models, and technology-led efficiency gains, with operators able to improve margins meaningfully through optimisation.

• On the investment side, while valuations were hit earlier in 2025 following tariff-related uncertainty, improved macro conditions, stabilising interest rates, and strong leasing momentum for modern, well-located facilities are expected to support a recovery in transaction activity and new development pipelines, with listed operators’ share prices showing gains relative to six months ago.

• Debt markets are expected to remain supportive for Self Storage, with a wide range of lenders attracted to its resilient cash flows and diversified demand. Competition will be strongest for large, stabilised portfolios, and as the sector matures, private operators that have a strong track record, robust operating fundamentals and strong ESG credentials will be best placed to secure favourable terms.

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FURTHER INFORMATION

Self Storage

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