H1 2026 Round-up

• Key deals included the acquisition of Cinch Self Storage by QuadReal, Sirius Real Estate's investment into Self Storage developments in Germany and the UK, and financing from PGIM and OakNorth to support UK platform expansion. Ardian's acquisition of Casaforte further highlighted institutional appetite, taking total investment to over €300 million across Italy and France since 2023, with plans to deploy a further €200 million primarily into Spain and Germany.

• Transaction volumes remain below recent peaks, but improving debt market conditions and resilient operating performance are supporting activity. Capital deployment is also becoming more varied through platform partnerships, management contracts and development funding, with investors focused on accurate data to support underwriting.

• Demand for built assets remains more concentrated on institutional-grade facilities, with a more inconsistent market for older “second generation” legacy stock. This has created selective opportunities to acquire higher-yielding, income-producing assets at softer pricing than in 2025, while development remains an attractive expansion strategy where suitable acquisition opportunities are limited.

• The market is seeing a variety of revenue growth strategies with increasingly sophisticated yield management and revenue optimisation approaches, coupled with operational efficiency driven by new operating models and the sector’s harnessing of AI tools. Some operators are focusing on gaining occupancy through discounted rents in the hope that they can later increase rents to drive revenue.

• Political uncertainty in the UK market has caused some major investors to pause or slow decision-making in that market and focus attention elsewhere.

• Continental Europe continues to offer a strong structural growth opportunity, supported by growing market penetration and consumer awareness, with fragmented ownership and greater potential for both occupancy and rental growth. Savills is seeing direct evidence of low churn rates and double-digit Existing Customer Rent Increases (ECRIs), which demonstrates the stickiness of the customer base.

• Operational costs remain a sector discussion point. Many operators are increasing investment in technology, data analytics and AI-enabled systems to improve productivity, optimise decision-making, reduce staffing requirements, and protect margins. Our benchmarking data shows downward trajectory of store-level staff costs on a per square metre basis.

• Whilst larger operators benefit from the scale to invest significantly in technology, a growing ecosystem of specialist suppliers is making these tools more accessible to small and mid-sized operators. This raises an important question for the sector: can digital innovation narrow the competitive gap and enable the "Digital Davids" to compete with the "Goliaths"?

• Development is becoming an attractive, if patient, route to scale, particularly where quality occupied assets are unavailable in selected markets. Development pipelines remain healthy, with Savills' London analysis identifying 27 consented schemes totalling c.1.7 million sq ft of MLA, equivalent to a c.14% increase in supply. Importantly, most planned schemes are located in micro-markets with sufficient demand to absorb additional capacity, supporting development-led expansion.

• Savills detailed mapping of the UK and major European cities indicates that Self Storage provision is lower than reported by some industry commentators, suggesting the total supply of space may be more limited than previously estimated.

Deal Highlights

Capital Markets & Debt

• Self Storage capital markets continue to show strength, with particularly strong debt availability from both banks and alternative lenders across a broad range of borrower profiles. Lending appetite is evident across the market, although the most attractive pricing and leverage remain concentrated among larger, scaled operators with proven business models. While debt availability has improved, the all-in cost of borrowing remains elevated relative to the low-rate environment that supported sector growth over the previous decade. As a result, operators are citing financing costs as a drag on earnings performance and a constraint on development viability.

• The conflict involving Iran and instability across the Middle East have disrupted energy markets and global supply chains, increasing inflationary pressures and weakening the outlook for further monetary easing. The European Central Bank raised rates in June in response to these pressures, while the Bank of England has remained on hold amid continued uncertainty over the persistence of the inflationary impact. Markets have consequently moved away from earlier expectations of further rate cuts and are pricing in the possibility that rates may remain higher for longer, with further increases possible if inflation proves more persistent. Underlying benchmarks, including SONIA and €STR, together with swap rates, therefore remain elevated, keeping financing costs above the levels many operators anticipated at the start of the year.

• Government bond yields remain elevated across both the UK and Europe, offering investors the highest returns seen for well over a decade. UK 10-year gilts are trading close to post-GFC highs, while German Bund yields remain significantly above the near-zero levels that characterised much of the previous decade. This has increased competition for capital, as investors can now achieve attractive returns from highly liquid sovereign debt, reducing the relative risk premium offered by real estate and contributing to more selective investment and acquisition activity.

• While elevated bond yields remain a competing destination for investor capital, experience from the 2024–2025 period demonstrated that when inflation moderates and interest rate expectations improve, capital can return relatively quickly to real estate markets. Should financing conditions become more supportive, this should provide additional momentum for investment activity across the Self Storage sector.

Listed Market

• Listed operators have now reported full-year 2025 results and early 2026 trading updates, with a consistent trend emerging across the UK market: occupancy has softened from recent highs, but stronger rental growth is supporting continued revenue growth. Safestore's UK occupancy declined from 80.6% in 2025 to 77.1% in H1 2026, but rents grew by a notable 6.5%, while Big Yellow fell from 79.1% to 77.0% in line with its stated strategy to focus on rental growth, with rents increasing by a respectable 4.0%. However, the picture is not uniform across the market, with Shurgard reporting 87.0% occupancy in 2025 and Stor-Age's UK portfolio increasing from 83.9% in 2025 to 85.2% in H1 2026. Shurgard reported positive but weaker rental growth of 1.7% in 2025, which was negative once the weakening pound was factored into the euro-denominated reporting. These variations highlight increasingly divergent operating strategies, with some operators prioritising rental growth and margin preservation, while others are focused on maintaining occupancy.

• The evidence from 2025 and H1 2026 suggests that the UK market is navigating a period of demand normalisation rather than structural deterioration. Occupancy trends are becoming increasingly market-specific, reflecting differences in operators' strategies, local supply expansion, housing market activity and business demand rather than a sector-wide reduction in demand. Savills data from our private sector clients shows occupancy levels of next-generation stores remain stable, with new stores generating good fill rates particularly in micro-markets that show balanced supply with local demand drivers, such as high-density living.

• European markets are performing in line with expectations. Following full-year 2025 results, listed operators are generally reporting stronger occupancy than in the UK alongside solid rental growth. Shurgard reported occupancies close to or above 90% across France, the Netherlands, Belgium, Sweden and Denmark during 2025. Performance is underpinned by lower market penetration, ongoing urbanisation and increasing consumer awareness. The combination of high occupancy and increasing rents suggests many continental markets are still benefiting from both demand-led growth and operational maturation.

• Savills data across the non-listed market highlights the importance of operator quality, asset quality and micro-market dynamics in driving occupancy and rental growth above CPI. Operators that are most effective at generating enquiries, converting customers and managing high-quality assets outperform their peers. ECRIs of more than 15%, alongside churn rates of around 10%, are common.

• Like-for-like rental growth has continued to exceed inflation in many markets, supported not only by market rental growth but also by increasingly sophisticated revenue management techniques, including ECRIs, which have become a more significant contributor to performance.

Technology and AI

• Rising labour costs, minimum wage increases, higher National Insurance contributions and property-related expenses such as business rates and local taxation remain a key focus for operators – like for all businesses. The historically high-margin nature of the freehold ownership model has helped absorb these pressures, supported by impressive efficiency gains across both public and private sector operators.

• AI is enabling operators to do more with the same resources, automating routine analysis and generating actionable insights from customer interactions to improve decision-making, identify occupancy and churn risks earlier, and enhance overall operational performance.

• AI adoption is becoming increasingly embedded across the global Self Storage sector. While US operators such as Public Storage and Extra Space continue to expand the use of AI across revenue management, customer engagement and operational efficiency, adoption is also becoming increasingly evident across the UK and Europe. Safestore’s recent report, for example, showcased the deployment of AI across pricing, marketing, lead conversion and operational decision-making, reflecting a broader trend towards technology-enabled optimisation as operators seek to enhance customer acquisition, improve pricing outcomes and offset rising operating costs.

Outlook

• H1 2026 results indicate that demand remains resilient, with rental growth remaining robust and operators investing in development and expansion despite the economic backdrop. Strategies are diverging, with some operators prioritising rental growth and margin protection, while others focus on occupancy and market share. Although trading conditions remain more challenging than at recent peaks, the sector continues to demonstrate attractive fundamentals, supported by structural demand drivers, market fragmentation and significant scope for further institutionalisation.

• Self Storage financing markets remain well supplied with capital and lender demand continuing to grow. Although elevated borrowing costs and economic uncertainty have tempered some demand drivers, these challenges appear cyclical rather than structural. As economic conditions stabilise, we expect a recovery in occupier demand to support improved occupancy, development activity and transaction volumes over the medium term.

• UK performance is increasingly being driven by revenue management and pricing discipline. Development remains the primary avenue for expansion, with listed operators still investing in new stores as they position for a recovery in customer activity and the sector’s long-term structural drivers.

• European capital cities are expected to be the primary growth engine for the sector, supported by lower market penetration, highly urbanised demographics and increasing institutional capital targeting platform expansion, acquisitions and development opportunities across markets including Spain, France, Germany and Italy.

• Operational performance is expected to become increasingly market-specific as geopolitical uncertainty and a more cautious economic outlook place greater emphasis on local supply-demand dynamics, catchment quality and revenue management capabilities than broader national market trends. As a result, operators with stronger data analytics, pricing discipline and site selection processes are likely to outperform.

• Technology adoption is expected to accelerate further, with automation, AI-enabled pricing tools and digital customer acquisition becoming important drivers of margin protection, operating leverage and competitive advantage as labour and property costs continue to rise.
  
  

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