Competition in the UK self-storage real estate sector is heating up. Europe's largest self-storage landlord Shurgard's (BE:SHUR) offer for UK rival Lok'n Store (LOK) is a direct threat to Big Yellow (BYG) and Safestore (SAFE), which have for years dominated the UK market as the first and second biggest players, ahead of privately-owned Access Self-Storage. Despite Shurgard's rule on the continent, it has languished in fourth, but its purchase of fifth-placed Lok'n Store gives it access to a pipeline of developments in the southeast and Manchester, as well as the opportunity to take the UK crown.
Shurgard has performed well. Its £4.22bn property portfolio is over ten times larger than Lok'n Store's and well over a third larger than Big Yellow or Safestore's. With an 87 per cent occupancy rate, it is also fuller than all three UK portfolios, which have occupancy rates of between 77 and 82 per cent.
However, where Shurgard might be envious of the UK players is their growth potential. Big Yellow and Safestore often argue their vacancy rates are rising because of how fast they are opening up stores and growing their rent roll. They appear to have a point. Safestore's net rental income (rental revenue minus the costs of running the properties and administrative expenses but before property value changes) rose 11.9 per cent last year, while Big Yellow's increased by 7.67 per cent. Shurgard's more cautious approach meant its net rental income ticked up just 5.4 per cent.