Market of the Month is a regular feature in List Self Storage – the idea of this series is to select and focus on a particular city or area, and then delve into StorTrack’s substantial data reserves to find some interesting and informative insights into the market from a self storage business perspective. This month, we take a look at Edinburgh – the capital of Scotland, the home to the world’s largest arts festival and a city where over 75% of the buildings are listed.
The self storage industry throughout the UK continues to grow but given the microeconomics of the storage product, there is still the threat of oversupply. Site selection is critical and determining a market for entry requires time and extensive research. We used data from MVP from StorTrack to evaluate Edinburgh, Scotland this month.
The City
As the capital of Scotland, Edinburgh is home to Edinburgh Castle which houses Scotland’s crown jewels and the Stone of Destiny, used in the coronation of Scottish rulers. The city consists of nearly 102 square miles and a population of 477,802 of which rental households make up more than 34% of the market. As the capital of Scotland, Edinburgh is home to Edinburgh Castle which houses Scotland’s crown jewels and the Stone of Destiny, used in the coronation of Scottish rulers.
Market Demographics
Because the cost of living is substantially higher than the national average (£270,111 average property value compared to £190,133 and £1,270 average rental value compared to £707), it could indicate a need for more proactive price setting as the market could potentially tolerate increases at a reasonable pace.
Supply and Demand
Rates per square foot are £0.78 compared to the national average of £1.01 however because there are 15 facilities in the city, the area benefits from only 0.41 square feet per capita with a national average of 1.37. There are no known developments in the pipeline and rental rates have demonstrated an 11.4% increase in the past year and 13% in the past three months. Additionally, the competition consists of small and mid-sized operators, enabling a new entrant to advertise without concern of REIT market share.
Three Things You Should Know about Edinburgh
No new facilities have opened in Edinburgh over the last year and, paired with no development activity, the market is relatively stable and rental rates and occupancies will likely remain stable.
All facilities in Edinburgh are advertising rentals online. More research should be done during due diligence to understand if this is because of oversupply.
Rental rate trends in the city have grown at a steady pace over the past year and have had very little fluctuation.
Investing in the self storage industry continues to become more and more competitive and, while there is certainly a need to act fast when acquiring, it is important to take an active role in market research. Evaluating historical data and considering the threat of new supply can be the difference in how successful you are. For more information on this market or others, visit StorTrack.com.
