Self-Storage Investment in Western Europe Grows After COVID Dings Other Assets

A half-century after the self-storage industry began to take off in the U.S during the 1970s, there are signs of a growing movement in the commercial real estate asset class across the pond, with many asset managers looking to pounce on ground-floor opportunity.

While self-storage has long been established in the United Kingdom, the property sector has slowly been gaining momentum in other parts of Western Europe in recent years. 

“It’s catching the attention of the larger asset managers because some smaller players in Europe first realized the opportunity because of the fact that we are talking about an asset class where you can add really small assets and it suited smaller asset managers,” said Tamás Márk, global head of real assets at IQ-EQ. “Some U.S. asset managers realized the untapped market here in Europe, and they started to build up a portfolio [combining those smaller assets].”

The entire European continent had 9,575 self-storage businesses in operation as of fall 2024 spanning 16.5 million square feet, according to an October industry report released by the Federation of European Self-Storage Associations (FEDESSA) and CBRE (CBRE). The U.K. led with 34.6 percent market share followed by France (15.8 percent), Germany (12.6 percent) and Spain (11.6 percent). 

Underscoring the growth of self-storage in Europe, the FEDESSA-CBRE report showed a strong pipeline across the continent with 262 projects in the planning stages or under construction, most notably in Northwestern European countries.

Despite small drops in occupancy rates, self-rental returns across Europe increased 2 percent year-over-year on average, with Portugal, Spain, the Netherlands, Germany and Belgium posting annual gains of above 5 percent, the FEDESSA-CBRE report showed. 

“We had a period of two or three years of outperformance in the U.K. and Europe, and I think people looked at other sectors that had a very difficult time and thought self-storage is a pretty good sector to be in,” said Oliver Close, senior director of self-storage operational real estate at CBRE. “That has driven more interest on the equity side than there was five years ago.”

Close noted that one big driver of increased money flowing into European self-storage stems from the COVID-19 pandemic, when the properties were able to remain open as essential businesses. That allowed the sector to outperform. He said many private equity players from North America have shown interest in the sector with increasing debt and equity also more available than five years ago. 

There is plenty of runway for self-storage growth in Western Europe, according to Márk, who noted a 2024 FEDESSA survey showed 70 percent of respondents in France had never heard of the sector compared to 10 percent in the U.K. 

Márk noted that part of what is driving self-storage’s emergence is increased urbanization in countries such as Spain, where an increasing number of people are opting to downsize into smaller apartments due to high housing costs. He stressed that asset managers are attracted to European self-storage investments in part due to higher yield opportunities than in the U.S since the sector is less known and therefore there’s less competition than on the other side of the Atlantic. 

“Everyone is looking to diversify their portfolio these days, and that’s a perfect way to do it because for most of them it’s a new asset class to tap into, and the second thing is the geographic locations,” Márk said. “It’s such a perfect asset class to diversify from a geographic point of view into new areas and new countries.”

The expansion of self-storage across Western and Southern Europe was underscored in late 2024 when Safestore Holdings, one of two publicly traded self-storage companies in the U.K. along with Big Yellow, expanded into Italy through a 50-50 joint venture with Nuveen Real Estate. The deal involved the JV acquiring Easybox, Italy’s second-largest self-storage operator by number of stores — with a grand total of 10 — with plans to scale in a country where there are only two self-storage stores for every 1 million people, according to Safestore.

The number of U.K.-listed self-storage companies shrunk last year when Shurgard, which is owned by U.S.-based Public Storage, acquired Lok’nStore in an all-cash deal for $474 million.

While Western Europe is seeing signs of growth in self-storage, CBRE’s Close does not foresee any new publicly listed self-
storage companies popping up anytime soon since there aren’t many groups big enough to scale to that level. Both Safestore and Big Yellow’s returns are down year-over-year, but Close stressed revenue was up for both in that period amid a tough inflationary environment with higher operating costs. That bodes well for the asset class. 

“They’re fundamentally great businesses, and Safestore has got a pipeline of 30 developments, and all the cash flow is going to fund the developments and fund the immature stores,” Close said. “In a difficult time, that performance wasn’t too bad, really, and we’ve definitely seen that before with COVID and the [Global Financial Crisis] where the sector has done really well.”

Aaron Swerdlin, vice chairman and leader of Newmark (NMRK)’s self-storage capital markets practice, said one factor that played a role in delaying the sector’s European takeoff outside of the U.K. stemmed from navigating myriad complex rules and regulations in individual countries.

While deal activity has been “sparse” in the last couple of years, the appetite from asset managers across the globe to invest in self-storage is dense, according to Swerdlin, with a foreign pension fund he couldn’t name indicating plans to deploy hundreds of millions of dollars in the sector. He said the resilience of the sector in tough economic times coupled with the fixed capital costs that the business requires make it very attractive for asset managers.  

Swerdlin said, despite the more attractive yields that can be obtained with Western Europe self-storage investments compared to the U.S., the scarcity of these assets presents a challenge for those looking to get into the game. 

“There’s not as much developed in Western Europe, and you’ve already got a handful of fairly large operators in Europe, so when something becomes available those large operators jump on it pretty quick,” Swerdlin said. “It’s a product type that’s early in its maturation process in Western Europe, and I don’t think it’s hit its stride yet. But, because there’s just not a lot of deals, I think people that want exposure, not just to storage but to storage in Western Europe, you’ve really narrowed your scope quite a bit.” 

The success of self-storage in the U.S. has increased the comfort level for lenders and private equity players to deploy capital into European transactions, according to Swerdlin. He said the U.K. is around 10 years behind the U.S. with self-storage development while Western Europe trails America by around 20 years.

American investors will continue to seek European self-storage opportunities that can yield better returns this year, Swerdlin said. He added, though, that they will likely go after smaller deals, with Big Yellow and Safestore already having a leg up on the competition. 

“A lot of the groups that got into storage 20 years ago are finding it exceedingly difficult to compete here because there’s so much capital that’s now allocated within the U.S. and they’re looking for other places to get better returns,” Swerdlin said. “The problem is groups that are there and established, when something comes up, they’re not going to let somebody else get a foothold. So it’s almost like these guys that are venturing from the U.S. into these markets are going to have to do it in small bites.”

Andrew Coen can be reached at acoen@commercialobserver.com.