In the last article, we highlighted the direction of the domestic market by examining the background of the growth of the self-storage market in Japan and its similarities with our country. This time, we would like to look at the UK market, which has the most mature self-storage market in Europe and shares similarities in population and industrial structure with our country.

The Most Developed Self-Storage Country in Europe

The UK is the largest market, holding about 40% of self-storage facilities in all of Europe. According to the Self Storage Association UK (SSA UK), as of 2024, there are approximately 2,900 self-storage facilities operating in the UK, covering a total area of 6 million square meters (about 1.81 million pyeong).

This indicates a facility density about 5 times higher than the European average. The market size is estimated at about 1.2 billion pounds (approximately 2.3 trillion won), with a noticeable demand particularly centered around London and metropolitan areas.

<Distribution of Self-Storage Facilities in the UK / Source: JLL>

It is noteworthy that this market, which has entered a mature phase, is still growing. As of 2023, the average annual revenue growth rate is about 5.5%, and the number of facilities per 100,000 people is 1.67, which is lower than in the US (10.1), but records a distinctive level within Europe.

The main reasons the UK market has developed are the 'shortage of urban residential space' and the 'reduction of storage space at home'. Since the 1980s, the average living area has gradually decreased, and particularly in newly built houses, it is often difficult to secure separate storage space, leading to a demand for a practical 'third space'.

In London, the average housing area is only 84 square meters, making space a daunting luxury. The co-living style is also spreading, with London accounting for about 32% of the co-living population in the UK, further increasing dependence on self-storage.

Additionally, the UK is one of the countries where the aging population is progressing rapidly within Europe, resulting in simultaneous increases in demand for downsizing and storage for inherited (Death) items. Following the COVID-19 pandemic, the rise of remote work and increased demand for space rearrangement has further expanded the use of storage.

New Ways to Utilize Urban Retail Space

<Fancy exterior of a UK self-storage facility / Source: Big Yellow, SafeStore>

UK self-storage facilities are generally located in urban areas or near residential areas, with many cases of buildings that were once retail stores being remodeled. This is being utilized as a way to increase the utilization of commercial spaces where fixed demand has decreased.

Leading operators like Big Yellow, Safestore, and Lok’nStore are purchasing commercial real estate located in major cities to develop or remodel them into high-rise self-storage facilities, employing strategies to enhance visibility through their own brand designs and exterior plans.

In fact, according to the SSA UK 2024 report, 47% of new customers reported that they recognized the service "by seeing it while passing by". This suggests that self-storage is not a hidden auxiliary facility, but is becoming a visible part of the urban infrastructure.

Business Utilization of Self-Storage

Another feature of self-storage in the UK is that the primary customer base includes not only individual customers but also small businesses and e-commerce operators. According to the SSA UK report, about 28% of all units are used for business purposes, showing that self-storage has established itself as a core logistics infrastructure for business beyond just storage space.

<Proportion of Self-Storage User Types in the UK / Source: Self Storage Association UK>

While the use of self-storage for business purposes is active in Japan and the US as well, the UK is evolving into a more advanced form. In many countries, self-storage focuses primarily on the function of simply 'storing' inventory or equipment, while in the UK, self-storage is actually being utilized as a 'base space' for business operations.

Some operators are setting up desks and workspaces within self-storage to conduct actual office work, or to perform ancillary tasks such as customer service and package shipping. Particularly, due to the higher flexibility and cost efficiency of self-storage compared to traditional commercial real estate, it serves as a kind of micro-office for small business operators and startups.

<Business utilization examples of self-storage / Source: Big Yellow>

The types of businesses utilizing self-storage are also very diverse. Entrepreneurs who operate both online and offline are actively using self-storage for items that do not require strict storage environments, such as consumer goods, clothing, LPs and collectibles, cosmetic inventory, and gardening tools. Entrepreneurs with seasonal stock, small-scale distributors, and platform founders providing services targeted at long-term travelers are also choosing this space.

This indicates that self-storage functions as the physical foundation of businesses and as an actual operational hub, beyond just simple space rental. In the future, self-storage is expected to expand its role as a new type of urban commercial space combined with flexible working methods.

Growth into Stable Real Estate Assets through a Mature Investment Environment

UK self-storage is evaluated as a very stable real estate sector in terms of operational profitability. The average monthly fee based on major cities is about 60,000 won per square meter, and in some urban areas like London, it can exceed 80,000 won. Unlike Korea, where small units dominate, in the UK, medium to large units prevail, resulting in actual monthly costs reaching 300,000 to 400,000 won.

This structure allows for expected yields of about 2 to 3 times compared to residential rental rates for the same area, which is why real estate development companies or large investment institutions such as REITs recognize self-storage as an attractive asset class. In fact, Safestore has established itself as a stable income asset with an average rental increase rate of over 7% over the past five years.

The main factors that enabled the growth of the UK self-storage market are legal stability and investment friendliness. Some large operators are raising funds in the capital market through publicly listed REIT structures. The number one operator in the UK, Safestore, operating 190 sites, is listed on the LSE (London Stock Exchange) and is recognized as a stable income asset with a market capitalization of about 2.4 billion pounds and an operating margin of over 70 percent.

In terms of operations, self-storage contracts are made under a license to occupy, rather than traditional lease agreements, allowing for a flexible rental structure. This enables rapid space turnover and pricing strategies tailored to various customer needs. Additionally, the fact that self-storage services were exempt from value-added tax (VAT) until 2012 also contributed to the market's growth.

Implications for the Korean Market

The case of the UK market provides significant implications as it suggests that self-storage is being absorbed as part of urban functions beyond just simple storage space. It performs multiple functions including 'utilization of vacant commercial spaces', 'logistics support for small businesses', and 'urban profit-generating real estate'.

Since the UK and Korea share many similarities in population and industrial structure, it serves as a valid reference for inferring the development direction of the Korean market. In particular, the increase of small businesses and online-based businesses in urban areas is similar, suggesting that the utilization of storage for inventory/equipment, as well as for business operations, is expected to expand in Korea. In fact, among the customers who use lofts for an extended period, many are business clients.

Moreover, the demand for urban regeneration centered around local governments and the recent increase in demand for senior housing are evolving structurally, similar to the UK’s self-storage demand as a New Economy. Furthermore, self-storage facilities integrated with IT technology, like lofts in Korea, are expected to respond to changes in customers' lifestyles and establish themselves as 'essential urban infrastructure' that redefines underutilized space.