Self-Storage industry remains resilient despite VAT increase
The news of VAT increases may have put fear into consumers, but the self-storage industry has managed to allay those fears with a gradual phasing of price increases for storage units. A survey from Deloitte Real Estate has highlighted some key facts and figures, but here we have compiled the important information and insight.
The key figure to take note of when it comes to occupancy rates is a 2% drop, down to 68% from 70%. Though this might be construed as a negative figure, it has actually been seen as a fairly neutral outcome in the wake of price increases – things could have been far worse had the price hike been fully laid in the customers lap all in one lump sum. There is still scope for the increase of residencies for most self-storage sites without the need for building new sites.
Who stores and why?
The customer’s needs seem to have shifted according to the report, with businesses increasing the length of their contracts even further. Previously, the average length of storage was 37 weeks, but this has now gone up to 41 weeks – something believed to be attributed to the use of self-storage by businesses. Stock, furniture and even important documents can all be stored during a move or renovations.
Domestic custom obviously plays a part and the recent recovery of construction and housing markets will no doubt have bolstered the need for self-storage. With a raft of new housing opportunities available, terraced housing seeing the biggest increase of development, first time buyers are more able to move and will need long and short term solutions for storing their possessions.
It is thought that overall for 2012 the industry turnover was £380 million, and while VAT increases meant there was potential for profit to be eaten away it seems things have remained stable. By reclaiming the VAT back at a later date, companies have shielded their customers from the lion share of the increase. The industry as a whole now expects to see either similar profits for 2013 or even an improvement, so clearly spirits are high for the year ahead.
Dominating the news of late has been the UK economic recovery, forecasts have been upped and the outlook is positive for most sectors now. While this might seem a spurious link to self-storage it is actually all good news. The housing market improvement will see more people needing storage but also businesses will now look toward expansion which should also generate more interest in storage.
Lower levels of unemployment will mean more disposable income for the general population, and the industry hopes that this will help to reverse the 2% drop levels of occupancy.
Plans for expansion
Though only 20% of companies are looking to expand their sites or build in new locations, the overall consensus is that improvement is imminent, both for profits and occupancy levels. This might lie in the fact that most sites haven’t yet come to a saturation point, and there is still plenty of room without spending money for expansion within the industry, 79% of the 830 companies in the survey agreed that they were confident of growth for their business. London and the South of England took up the largest share of the business with Wales and the West having most room for improvement when it comes to self-storage.