The Potential of Self-Storage in Europe: An Interview

Unwired Logic: Please tell us about yourself and your self-storage business in Europe

My name is Alberto Serrano, and I am a Spanish entrepreneur. I started my first business fresh out of university. I have had my successes and failures, and I am currently focusing on self-storage and housing. I operate rent-by-the-room houses in Malaga and several self-storage locations. The city has excellent outside connections through the airport and attracts people from all over Europe to work remotely or retire. This boom is driving up real-estate prices, so there was a real opportunity for self-storage in the area. My wife and I started the self-storage business in 2013. We have five facilities around Malaga.

Unwired Logic: Where is the self-storage industry in Europe and Spain currently standing?

I think self-storage in Europe is a child, not a teenager. There are not yet institutional investors. There is more demand than supply in most metropolitan areas of Europe, with some exceptions. However, since it's a very local business, it doesn't matter much because people are willing to pay more to a store close to the house than to drive 20 minutes to a cheaper place with more supply.
There has not yet been a consolidation phase in Europe. If you look at all the big players, they are opening more stores from scratch than buying companies at the moment. If we were in a developed market, we would see more buy-out of competitors. Self-storage is present in big cities and capitals. But in middle-sized cities, 200,000-5,000,000 people, I see a lot of potential and room to grow.

Unwired Logic: What about Spain?

In Spain, we have two very big metropolitan areas - Madrid and Barcelona with their 5-6 million populations, with a lot of pressure on the housing market. Finding housing is particularly challenging in Barcelona, where new hotel development and renting policies are stringent and restrictive. Higher house prices always translate to more demand for self-storage, which is most mature in these two cities. But in the other areas, there is hardly any competition, which is good and bad. On the one hand, you get the first-mover advantage if you are the first bigger player in that area.
But on the other hand, you have to educate the customers. They might have no experience with self-storage, its costs, and how it works. You have to put in effort to explain it.

Unwired Logic: Let's talk about the European Self-Storage Association FEDESSA – what activities do you do, and how do you support your members in self-storage business?

Europe's population is more than twice that of the United States, around 700 million people. But we have over 40 countries and at least that many different languages. That diversity is good for many reasons, but a major drawback is that we don't have a common language, and English literacy is low in some countries, especially in the Mediterranean. We don't have a common currency everywhere, either. Not everyone uses the Euro. We also still need a passport to travel to some European countries. However, the biggest issue is – we don't have common policies. For example, in some countries, it is forbidden to put storage underneath a building; in other countries, you are allowed. There is also no consolidated information about policies and regulations, making it harder for investors to enter the market.
Each country typically has its local association with its conferences and support. However, they are not always translated into English, limiting participation and information flow. We organize a pan-European conference once a year – in 2023, in Rotterdam – to invite members from different countries to meet and exchange. This year we are aiming for 1000 participants. It is the second biggest self-storage conference in the world. The two major topics this year will be Artificial Intelligence and Remote Management Facilities. 

Unwired Logic: This is a perfect segway into our next point of discussion – where does automation of self-storage management stand in Europe?

There are essentially two types of facilities – locally managed, with people on-site during opening hours, and automated facilities, centrally managed from a headquarters. Full automation does not exist in our business. Someone still needs to check and clean the facility at least once a week. Investment funds that open big facility buildings normally go for manned/ locally managed. However, smaller facilities are typically centrally managed. We have a new facility in our pipeline, which will be centrally managed. 

Companies usually choose to have a manned facility because self-storage is still a novelty in many parts of Europe. You need to meet the customer and give them a tour before they sign up. That's why we have prepared an office. 

Unwired Logic: Final question. What advice would you give someone who is considering entering the self-storage business in Europe?

Before signing the contract for the building, put up ads to get an idea of whether there is demand in that area. See how many people click on your ads and how many are interested. The second piece of advice is to grow in phases. Start with no more than 80-100 doors. When they are 70-80% full, you begin the second phase with another 100 doors, and so on. That way, you can quickly understand what sizes are in demand and only spend money when needed.