Self-storage industry remains resilient despite VAT increaseOctober 29, 2013
There was some good news for the self-storage industry earlier this year as it was revealed that VAT increases had not heavily impacted business, mainly due to the incremental rises in prices which have helped ease the rise in cost for customers over a longer period of time. This tactic has softened the blow for customers and businesses alike, with only a 2% drop in occupancy, taking the figure down to 68% overall.
As a whole, the industry is not looking to take over more new sites, and new stores are not in the pipeline for most businesses. However, the industry does expect to see an increase in profits or at least see the same level of profit. This could be due to an increase in the average length of occupancy from 37 to 41 weeks, with businesses taking out longer contracts than domestic customers (up to 42% of residency is down to use from businesses).
Rather than develop new sites, it is the aim of the industry to build upon the already strong levels of occupancy, since not all sites are at maximum use yet. It was estimated by Deloitte Real Estate that turnover for 2012 was £380 million with almost 830 sites across the UK. The customer base is thought to be one of the reasons why prospects are so bright for self-storage; everyone from students to large corporations need to move at some time, meaning they need reliable and secure storage of possessions, stock and furniture.
The 2% drop in custom is something which will drive businesses on into 2014, with a reverse of this figure the aim for the industry as a whole. With the ability to reclaim part or all of the cost of the VAT, most companies feel confident that the VAT rises haven’t had as great an impact on custom as feared, passing on only a small fraction of the cost to consumers has meant that business has stayed fairly stable.
London and the South dominate large portions of the industry with the West and Wales making up the smallest fraction. Clearly there is room for improvement now that the VAT storm has blown through with minimal damage, and the resilience that the UK economy has shown of late will no doubt bolster the industry. With credit more easily available and the expansion of businesses likely, there will be more opportunities for trade when it comes to storage.
The housing industry can provide a huge shot in the arm, with first time buyers finally getting an opportunity to get onto the housing ladder. With construction expanding, it should see movers become more positive than they have been since 2007, needing to store their goods before, during or after a move. Completion of terraced houses has risen dramatically, and while this is good news in one sense for movers it also means the space in people’s homes will not accommodate all of their possessions immediately.
Only 20% of operators are thought to be considering expansion or new sites, but while 79% feel confident of improvement in their rates and occupancy it is obvious that there is a great deal of optimism for the immediate future of the industry. If the current economic improvement holds up in the next 12 months then the optimism could prove to be well founded.
Image Credits: iStockPhotos
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