Cushman & Wakefield RETHINKING: The Shape Of Real Estate 2040

The growth in demand for self storage space over recent years is due to a number of factors. An increasing population has increased the overall potential customer base. This has coincided with an increase in major life events – namely births, deaths and divorces – all of which can often stoke the need for additional space. There has also been substantial evolution in the housing market. Soaring prices due to demand heavily outweighing supply has led to homes becoming increasingly unaffordable. This, combined with economic and policy-led drivers, has underpinned growth in the private rented sector. With PRS typically comes a greater level of home moving, with greater flexibility as well as insecurity with both the occupier and landlord being able to choose to break the tenancy. Concurrently, rapidly increasing rents (as well as smaller household sizes) are putting pressure on the size of dwellings, meaning moving into smaller units is more common. Both of these factors – moving home more often and moving into smaller dwellings – are key drivers of self storage demand.

Looking ahead, these factors are expected to continue along broadly similar trajectories through to 2040. The number of births is expected to decrease over the next five years before starting to increase modestly, while the number of deaths are projected to gradually increase as the population ages. The 20-74 year old population (those most relevant to the self storage market) is expected to increase at a diminishing annual rate through to a peak in 2038, when it begins to subside marginally. Finally, housing unaffordability – measured through comparing house prices to earnings – is also expected to continue to rise, with a growing share of the population living in PRS tenures. As such, the strength of demand in the sector is expected to continue, albeit at a slightly tempered rate as the sector matures. Based on these demand-side drivers, self storage floorspace in the UK is expected to expand by 38.5% between 2023 and 2040. This equates to an increase of 23.1 million sq ft, with demand – and eventual supply – expected to be concentrated in urban areas.

As with the state of the current market, the increase up to 1.18 sq ft per person may not satisfy the full requirement for self storage space in the UK. With an imbalance between demand and supply likely to continue, this paints a positive scene for persisting rental growth over the years to come even as the market continues to expand.

RETHINKING: THE SHAPE OF REAL ESTATE IN THE UK

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CUSHMAN & WAKEFIELD